At the beginning of the year, an audio engineer quit his job and gave up a salary of $175,000 per year in order to start his own business, Sound Devices, Inc. The new company builds, installs, and maintains custom audio equipment for businesses that require high-quality audio systems. A partial income statement for Sound Devices, Inc, is shown below: 2010 Revenues Revenue from sales of product and services $970,000 Operating costs and expenses Cost of products and services sold 355,000 Selling expenses 155,000 Administrative expenses 45,000 Total operating cost and expenses $555,000 Income from operations $415,000 Interest expense (bank loan) 45,000 Legal expenses to start business 28,000 Income taxes 165,000 Net income $177,000 To get started, the owner of Sound Devices spent $100,000 of his personal savings to pay for some of the capital equipment used in the business. In 2010, the owner of Sound Devices could have earned a 15 percent return by investing in stocks of other new businesses with risk levels similar to the risk level at Sound Devices. What is total implicit cost in 2010?

Implicit costs:

Salary: 175000

Interest: 100000*15% = 15000

Question: what is the best way to recognize implicit cost? I understand it's a foregone opportunity, and no monetary payment. However, sometime I get confused. For example: the implicit costs here include the forgone salary (175000) and interest (15000), but how about the $100,000 personal saving? Should this $100,000 be listed in the implicit cost? For my understanding, the total implicit costs should be 175000+100000+15000=290000. Because if he didn't invest $100,000 of his personal saving to pay the capital equipment, he would still have $100,000 plus the 15% interest.