Question
After the training, John withdrew $110,000 from his savings account. He had been earning 5 percent interest per year for this account. He also borrowed
After the training, John withdrew $110,000 from his savings account. He had been earning 5 percent interest per year for this account. He also borrowed $50,000.00 from his friend whom he pays 6 percent interest per year. Further, to start the business John used his own premises. He was receiving $12,000 from rent per year. Finally, to start the business John uses $50,000 he had been given by his father to go on holiday to USA.
John's first year of business can be summarised as follows:
Item
Amount $
Revenue- Pizza Section
400,000
Revenue- Beverages Section
190,000
2 Cashiers (wages per worker)
55,000
Pizza ingredients
50,000
Manager
75,000
3 Pizza bakers (wages per baker)
60,000
Equipment
10,000
Based on your calculated accounting profit and economic profit, would you advise John to return to his teaching job?Show your work
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