A few years ago a construction manager earning

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Q. "A few years ago a construction manager earning $70,000 every year working for a regional home builder decided to open his own home building company. He took $100,000 out of one of his investment accounts that had been earning around 6% a year also utilized that money to start up the business. He worked hard the 1st year, hiring one employee (his only salary cost for the business was the $40,000 paid to this employee) also generated total sales of $1,000,000. Total material also subcontracted labor costs for the year were $900,000. Compute accounting profit. Illustrate what are the opportunity costs for the manager of being in this business relative to returning to his old job? Illustrate what is the economic profit of the business?"

Reference no: EM1321874

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