User Account

All Pages

Economic profit is lower than his accounting profit

Assignment Help Business Management
Reference no: EM131386002

Bryan is trying to decide whether he should give up his job as a software programmer and invest in a start-up. Bryan earns an annual salary of $80,000 and has a saving of $50,000. The start-up would require an initial investment of $600,000. Bryan plans to take a loan from Trust Bank, a local commercial bank, which charges an interest rate of 5 percent on loans and provides an interest of 7 percent on savings deposits. Which of the following is true in this case?

  • Bryan should not invest in the start-up as his economic profit is lower than his accounting profit.

  • The 7 percent interest that Bryan could have earned on his savings will be included in the calculation of his economic profit.

  • The interest rate of 5 percent on loans is a part of the implicit cost of setting up the start-up and will be included in the calculation of his accounting profit.

  • Bryan should invest in the start-up as he has to pay a lower interest rate on loans than he receives on his savings deposits.

Reference no: EM131386002

Questions Cloud

Ross opportunity cost of producing a pound of butter : Suppose both Ross and Vivian produce butter and cheese. When Ross works for 10 hours a day, he produces 6 pounds of butter and 24 pounds of cheese. When Vivian works for the same hours, she produces 20 pounds of cheese and 40 pounds of butter. Ros..
Identify your inputs and outputs : Develop the minimized gate-level implementation using the K-map method.
What is the function of footage in the film : Movie: Citizen Kane In terms of realism, "Citizen Kane" heavily uses images that masquerade as documentary footage, What is the function of this footage in the film? Why is it there? What purpose does it serve? If any of you are aware of this film's..
Specify the function by filling out a complete truth table : The outputs indicate the highest index of the inputs that is driven high. For example, if 13 is 0, 12 is 1, 11 is 1, then 01, 00 would be 10 (i.e., 12 is the highest input set to 1).
Economic profit is lower than his accounting profit : The start-up would require an initial investment of $600,000. Bryan plans to take a loan from Trust Bank, a local commercial bank, which charges an interest rate of 5 percent on loans and provides an interest of 7 percent on savings deposits. Whic..
Calculate what his sales would have been : Calculate what his sales would have been if he had not made any errors.- Given that his expenses remain constant at 8% of his sales, calculate his net profit for the year 2015.
Absolute advantage in making guns : Suppose both Monica and Edith grow roses and make guns. If Monica devotes 10 hours to growing roses, she grows 16 roses, and if she devotes 10 hours to making guns, she produces 4 guns. If Edith divides her 10 hours equally, she produces 12 roses ..
Describe the function of this block : One block maps the month into a day offset into the year. Identify the inputs and outputs and their bit widths. Use any formal specification method you wish (e.g., truth tables, ROM contents, equations, hardware description language, etc.) to desc..
Real interest rates and political business cycle refers : Real interest rates. The political business cycle refers to.  Suppose aggregate demand fell. In order to stabilize the economy, the government might. Which of the following likely occurs when households and firms become more pessimistic?

Reviews

Write a Review

Business Management Questions & Answers

  Caselet on michael porter’s value chain management

The assignment in management is a two part assignment dealing 1.Theory of function of management. 2. Operations and Controlling.

  Mountain man brewing company

Mountain Man Brewing, a family owned business where Chris Prangel, the son of the president joins. Due to increase in the preference for light beer drinkers, Chris Prangel wants to introduce light beer version in Mountain Man. An analysis into the la..

  Mountain man brewing company

Mountain Man Brewing, a family owned business where Chris Prangel, the son of the president joins. An analysis into the launch of Mountain Man Light over the present Mountain Man Lager.

  Analysis of the case using the doing ethics technique

Analysis of the case using the Doing Ethics Technique (DET). Analysis of the ethical issue(s) from the perspective of an ICT professional, using the ACS Code of  Conduct and properly relating clauses from the ACS Code of Conduct to the ethical issue.

  Affiliations and partnerships

Affiliations and partnerships are frequently used to reach a larger local audience? Which options stand to avail for the Hotel manager and what problems do these pose.

  Innovation-friendly regulations

What influence (if any) can organizations exercise to encourage ‘innovation-friendly' regulations?

  Effect of regional and corporate cultural issues

Present your findings as a group powerpoint with an audio file. In addition individually write up your own conclusions as to the effects of regional cultural issues on the corporate organisational culture of this multinational company as it conducts ..

  Structure of business plan

This assignment shows a structure of business plan. The task is to write a business plane about a Diet Shop.

  Identify the purposes of different types of organisations

Identify the purposes of different types of organisations.

  Entrepreneur case study for analysis

Entrepreneur Case Study for Analysis. Analyze Robin Wolaner's suitability to be an entrepreneur

  Forecasting and business analysis

This problem requires you to apply your cross-sectional analysis skills to a real cross-sectional data set with the goal of answering a specific research question.

  Educational instructional leadership

Prepare a major handout on the key principles of instructional leadership

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +91-977-207-8620

Phone: +91-977-207-8620

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd