Last year Chloe quit her $60,000 per year job as a web-page designer for a leading computer software company to buy a small hotel on Saranac Lake. The purchase price of the hotel was $300,000, which she financed by selling a tax-free municipal bond that earned 5.5% per year.

Chloe’s total operating expenses and revenues were $100,000 and $200,000, respectively.

a. Calculate Chloe’s accounting profit.

b. Calculate Chloe’s economic profit.