Compute the explicit costs

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Peter's father gave him a construction company with an asset worth $400,000. Peter proudly told to some of his fellow directors that his revenues were typically RM35,000 per month, while his operating cost for fuel was $8,000 and maintenance $5,000 per month. The estimated depreciation was $10,000 per month. An office space similar to Peter 's office space can be rented for $15,000 per month. If Peter was working for one of his competing construction companies, he would have earned $5,000 per month.

i. List the items that Peter would consider to compute his explicit costs.

ii. List the items that Peter would consider to compute his implicit costs.

iii. Compute Peter's monthly total economic cost.

iv. Should Peter continue his business? Support your answer with calculations.

Reference no: EM131732503

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