Question 3 (10 Marks)

Manele, a financial consultant, has been self employed for two years. His list of clients has grown and he is earning a reputation as a shrewd investor. Manele rents a small office, uses the pool secretarial services, and has purchased a vehicle that he is depreciating over three years.

The following income statements cover Charless first two years of business: Year.1 Year.2

Commission revenue R25 000 R65 000

Rent R12 000 R12 000

Secretarial services R3 000 R9 000

Car expenses, gas, insurance R6 000 R6 500

Depreciation R15 000 R15 000

Net income R11 000 R22 500

Manele believes that he should earn more than R11 500 for working very hard for two years. He is thinking about going to work for an investment company where he can earn R40 000 per year. What would you advise Manele to do?