An individuals leaves a college faculty, where she wass earning $40,000 a year, to begin a new venture. she invests her saving of $10,000 when were earning 10% annuallly. she then spends $20,000 on official equipment, hire two students at $30,000 a year each, rents office space for $12,000 and has other variable expenses of $40,000 at the end of the year her revenues were $200,000. What is her accounting profit and her economic profit for the year?
What are the year's events?
No College Salary: (40000)
Invested Savings: (10000)
Lost Interest: (1000)
Office Equipment: (20000)
Two Employees: (60000)
Other Expenses: (40000)
There must be something with the opposite sign. Income?
Which ones are cash and which are opportunity lost?
Which produced real assets and which are sunk funds?