Emily Adessa is an attorney employed by a large law firm at a salary of $85,000 per year. She is considering whether to become a sole practitioner, which would probably generate annually $410,000 in operating revenues and $290,000 in operating expenses. Requirements 1. Present two tabulations of the annual income effects of these alternatives. The second tabulation should include the opportunity cost of Adessa's compensation as an employee. 2. Suppose Adessa prefers less risk and chooses to stay an employee. Show a tabulation of the income effects of rejecting the opportunity of independent practice. Begin by performing an incremental analysis assuming that Adessa becomes a sole practitioner. (Use a minus sign or parentheses to show a decrease in incremental income.) Assume Adessa becomes a sole practitioner Incremental benefits 325,000 290,000 Less: Incremental costs 35,000 Incremental income effects per year Now perform the income effect analysis taking an opportunity-cost approach. (Use a minus sign or parentheses to show a decrease in income.) Alternative Chosen: Sole Practitioner 410,000 Revenue Outlay costs (operating expenses) 290,000 120,000 Opportunity cost of employee salary -85,000 Income effects per year 35,000 Requirement 2. Suppose Adessa prefers less risk and chooses to stay an employee. Show a tabulation of the income effects of rejecting the opportunity of independent practice. Use the opportunity-cost approach. (Use a minus sign or arentheses to show a decrease in income.) Alternative chosen: Stay as an employee 85,000 - 120,000 35,000 Income effects per year