Answered step by step
Verified Expert Solution
Question
1 Approved Answer
REFER TO THE INFORMATION GIVEN BELOW FOR QUESTIONS 17-21 Mark , a landscaper, is planning to open his own landscaping company. He currently earns $30,000
REFER TO THE INFORMATION GIVEN BELOW FOR QUESTIONS 17-21 Mark , a landscaper, is planning to open his own landscaping company. He currently earns $30,000 per year working for his friend. He plans to use $10,000 of his savings to pay for the equipment he needs and borrow $20000 from the bank. The current interest rate is 5 percent. He has calculated that it will cost him $14000 in rent, $8,000 for utilities and $11,000 for an assistant per year to run his company. He plans to pay $20,000 for goods he will purchase from other firms. He assumes that the normal profit from setting the landscaping company near the pond surrounded by beautiful trees would have been $ 9000. Mark estimates that he could sell the equipment after use for around $ 24000 in the market. He expects to earn $160000 in one year time.His accountant predicts the depreciation rate , 5%. 17) What is the value of total explicit costs of the company? A) $84000 B) $54000 C) $64000 D)$74000 18) What are the total implicit costs to be incurred ? A) $40000 B) $39500 C) $45000 D) $45500 19) What are the total opportunity costs of the company ? A) $129000 B) $129500 C) $109000 D) $119500 20) What is the accounting profit of the landscaping company at the end of the period ? A) $76000 B) $75000 C) $74500 D) $76500 21) What is the economic profit of the company? A) $31000 8) $51000 C) $30500 D) $ 40500
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started