Let's consider the Loftus Ranches investment decision. Land is $250,000. The brewery building is $1,250,000. The brewing equipment is $1,250,000. Other general start up expenses total $1,000,000. If you did not build a brewery, and grew hops on that land instead, you could earn $2 million on that land. If you do build the brewery you would earn $4 million.

a. What is the explicit cost of this investment?

b. What is the implicit cost of this investment? 

c. What is the accounting profit of this venture? 

d. What is the economic profit of this venture

Answer rating: 100% (QA)

a The explicit costs of this investment are the actual outofpocket expenses incurred for the land bu... View the full answer