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Graded Exercise on Accounting Profit/Economic ProfitName 1) The owner of Crested Blue Rentals purchased $150,000 worth of skis for rentals. The revenue from the rentals
Graded Exercise on Accounting Profit/Economic ProfitName 1) The owner of Crested Blue Rentals purchased $150,000 worth of skis for rentals. The revenue from the rentals is $300,000. Utilities are $20,000 per year and wages are $50,000. There is an outstanding loan, and the interest owing per year is $12,000. I the skis had not been purchased, the owner could earn $11,500 in annual interest income on the $150,000 otherwise used to buy the skis. The owner was offered another managerial position at another ski shop for $40,000 a year A. What is the accounting profit of Crested Blue Rentals? B. What is the economic profit of Crested Blue Rentals? 2) Henry owns and operates business that )Heanry oents and odher expem s100 on the money created trough his sale. Henry's total revenue for the year is $100,000. sell it and earn yearly interest of $100 on the Instead of working as a consultant for the year, a small business that provides economic consulting services. During the year, he spends $35,000 on and the computer that he owns depreciates by $2,000. If he didn't use his computer, he could he could teach economics at a small college and make a salary of $50,000. teach A. What is Henry's accounting profit? B. What is Henry's economic profte? comtinue to work as a consullant, or should he teach conomies instead
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