You are contemplating whether you should start your own business. You expect that the first year this new business will receive $100,000 in revenue, and incur a cost of $80,000. You will have to spend $300,000 of your personal savings on the business. You will have the opportunity to invest your savings in stocks of other businesses with risk levels similar to the risk level of your own business, and earn a 10% return.

1. What will be the accounting profit for the year? Show your work.

1. What will be the economic profit for the year? Show your work.

Answer rating: 100% (QA)

To calculate the accounting profit and economic profit for the year lets break down the calculati... View the full answer