Question
Carl is a plumber that decided to give up his $75,000/year job working for a plumbing contractor to start his own plumbing business. He uses
Carl is a plumber that decided to give up his $75,000/year job working for a plumbing contractor to start his own plumbing business. He uses $250,000 of his own money to start the business. This money was previously invested in an account that paid 4% ($10,000) per year in interest. Carl will earn $150,000 in revenue in the first year and incur total explicit expenses of $100,000 in the first year of business. Carl is not on the payroll and is not compensated for using his own money to start the business. How much economic profit is projected to be earned in the first year of operation? A$65,000 economic profit B$50,000 economic profit C$40,000 economic profit D$-35,000 economic loss E$-85,000 economic loss
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