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Julia Rozzi is an attorney employed by a large law firm at a salary of $75,000 per year. She is considering whether to become a
Julia Rozzi is an attorney employed by a large law firm at a salary of $75,000 per year. She is considering whether to become a sole practitioner, which would probably generate annually $380,000 in operating revenues and $310,000 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 Rozzi's compensation as an employee. 2. Suppose Rozzi prefers less risk and chooses to stay an employee. Show a tabulation of the income effects of rejecting the opportunity independent practice Alternative Chosen: Sole Practitioner Revenue Outlay costs (operating expenses) Incremental benefits Opportunity cost of employee salary Income effects per year Requirement 2. Suppose Rozzi 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 parentheses to show a decrease in income.) Alternative Chosen: Stay as an employee Opportunity cost of sole practitioner practice Income effects per year
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