Question

An owner can lease her building for $ 120,000 per year for three years. The explicit cost of maintaining the building is $ 40,000, and the implicit cost is $ 55,000. All revenues are received, and costs borne, at the end of each year. If the interest rate is 5 percent, determine the present value of the stream of
a. Accounting profits.
b. Economic profits.



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  • CreatedApril 18, 2014
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