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Unformatted text preview: over $850,000. 3. Bowen may be more financially fit if he works for someone else after he sells the farm (without consideration to other factors, and basing the decision off of finances). 4. a. Accounting profits revenues 2,000,000 Less Salaries 1,500,000 operating exp 250,000 depreciation 5,000 total 1,775,000 operating income 245,000 less in expense 75,000 profit 170,000 b. Economic profits revenues 2,000,000 Less salary 1,500,000 operating expenses 250,000 depreciation 20,000 foregone income 100,000 total 1,870,000 economic profit before costs 130,000 less int expense 75,000 profit before tax 55,000 c. explicit – salary, operating expenses, depreciation, interest implicit – foregone income and all additional depreciation that is not for tax purposes....
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This note was uploaded on 01/30/2011 for the course ECO 5705 taught by Professor Kest during the Spring '10 term at Hodges University.
- Spring '10
- Opportunity Cost