Samantha has been working for a law firm and earning an annual salary of $90,000 . She decides to open her own practice. Her annual expenses will include $15,000 for office rent, $3,000 for equipment rental, $1,000 for supplies, $1,200 for utilities, and a $35,000 salary for a secretary/bookkeeper. Samantha will cover her start-up expenses by cashing in a $20,000 certificate of deposit on which
she was earning annual interest of $1,000 . Assuming that there are no additional expenses, Samantha's annual implicit costs will equal
a. $55,200
b. $221,400
c. $91,000
d. $146,200
e. $145,200
C
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Suppose a new employee is promised a pension payment of $8000 in the twenty-fourth year after joining the firm. The current pension contribution is $2000 a year. Assuming a six percent rate of return, this pension plan is said to be
A) fully funded. B) partly funded. C) unfunded. D) fully vested.
The information revolution is:
A. putting upward pressure on wages. B. increasing manufacturing employment. C. changing the nature of employment. D. reducing overall employment.
Economic growth
A. Is an increase in output or real GDP. B. Involves reduced capacity in the short run. C. Causes a contraction in the production possibilities curve. D. None of the choices are correct.
Assume that the current spot exchange rate is $1.98/£, that the three-month forward exchange rate is $2.00/£, and that a speculator believes that the spot rate in three months will be $2.05/£. How can this person speculate in the forward market? Also assume that the speculator is willing to take a position of about $20 million or £10 million. How much will the speculator earn if he or she is correct?
What will be an ideal response?