Suppose your current job pays you $250,000 a year. However, you are considering starting your own...

Suppose your current job pays you $250,000 a year. However, you are considering starting your own company. Based upon your research, you estimate your first year
total revenue to be $6,500,000. There are however several costs of running the
company during this first year, such as the cost of materials which will equal $1,800,000, employees who will receive in total $1,500,000, utilities which will cost $1,300,000, and rent that will be paid to the landlord that equals $1,700,000. Based on this information, solve for both your accounting profit and economic profit during this first year. Also, state whether you are better off starting this company or staying in your current job.

Solutions

Expert Solution

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

Suppose your current job pays you $125,000 a year. However, you are considering starting your own company.

Suppose your current job pays you $125,000 a year. However, you are considering starting your own company. Based upon your research, you estimate your first year total revenue to be $3,000,000. There are however several costs of running the company during this first year, such as the cost of materials which will equal $1,200,000, employees who will receive in total $850,000, utilities which will cost $350,000, and rent that will be paid to the landlord that equals $500,000. Based on...

Your Restaurant Business Discussion Part 1: Opening Your Own Business You are considering starting your own...

Your Restaurant Business Discussion Part 1: Opening Your Own Business You are considering starting your own restaurant. What are the types of business organizations can you choose from? Which one would you choose, and what benefits and disadvantages would that form offer you? Part 2: Accounting for Your Own Business Throughout the course, you will be working on your own fictitious business—a new restaurant! In Part 1 of this discussion, you chose how you would like to structure your business:...

. You are considering starting a walk-in clinic. Your financial projections for the first year of...

. You are considering starting a walk-in clinic. Your financial projections for the first year of operations are as follows: Number of Visits 25,000 Utilities $4,500 Wages and Benefits $290,000 Medical Supplies $45,000 Rent $10,000 Administrative Supplies $10,000 Depreciation $40,000 Assume that all costs are fixed except supplies costs, which are variable. a. What is the clinic’s underlying cost structure? b. What are the clinics expected total cost? c. What are the clinic’s estimated total cost at 7,500 visits? At...

Questions Imagine you are considering starting your own business or owning a franchise. 1. What kinds...

Questions Imagine you are considering starting your own business or owning a franchise. 1. What kinds of products or services will you offer? 2. What talents or skills do you need to run the business? 3. Do you have all the skills and resources to start the business, or will you need to find one or more partners? If so, what skills would your partners need to have? 4. What form of business ownership would you choose - sole proprietorship,...

Suppose that you are considering a conventional, fixed-rate 20-year mortgage loan for $250,000. The lender quotes...

Suppose that you are considering a conventional, fixed-rate 20-year mortgage loan for $250,000. The lender quotes an APR of 7%, compounded monthly; mortgage payments would be monthly, beginning one month after the closing on your home purchase. In the tenth year of your mortgage (months 109 through 120), what would be the total dollar amount of the interest paid? Do not round at intermediate steps in your calculation. Group of answer choices $15,199.56 $13,159.65 $12,112.53 $14,064.27

You are offered two jobs. Job 1 initially pays $25,000 / year, and your salary will...

You are offered two jobs. Job 1 initially pays $25,000 / year, and your salary will grow annually at 10%. Job 2 pays $22,000 / year, but your salary will grow at 12%. After 10 years, which job pays the higher salary? ****** (Answers MUST be rounded to the nearest hundredth .)****** a. FV(Job 1)= $ b. FV ( 2) = $ c. Which one is better?

You are considering starting a walk-in clinic. Your financial projections for the first year of operations...

You are considering starting a walk-in clinic. Your financial projections for the first year of operations are as follows: Revenues (20,000 visits) $1,000,000 Wages and benefits 400,000 Rent 20,000 Depreciation 50,000 Utilities 5,000 Medical supplies 100,000 Administrative supplies 20,000 Assume that all costs are fixed, except supply costs, which are variable. Furthermore, assume that the clinic must pay taxes at a 35 percent rate. 1) What is the breakeven number of visits? 2) What are the number of visits to...

You are considering starting a walk-in clinic. Your financial projections for the first year of operations...

You are considering starting a walk-in clinic. Your financial projections for the first year of operations are below. Revenue and variable costs are based on the projected number of visits. Medical and administrative supplies are variable costs; all other costs are fixed costs. Medical and administrative supplies are variable costs; all other costs are fixed costs. Projected Visits 12,000 Revenues $650,000 Wages & benefits 300,000 Rent 6,500 Depreciation 40,000 Utilities 4,200 Medical supplies 55,000 Administrative supplies 10,000 a. Construct...

You are considering starting a walk-in clinic. Your financial projections for the first year of operations...

You are considering starting a walk-in clinic. Your financial projections for the first year of operations are as follows: Number of visits 10,000 Utilities $ 2,500 Wages and benefits $220,000 Medical supplies $50,000 Rent $ 5,000 Administrative supplies $ 10,000 Depreciation $ 30,000 Assume that all costs are fixed except supplies costs, which are variable. a. What is the clinic’s underlying cost structure? b. What are the clinic’s expected total costs? c. What are the clinic’s estimated total costs at...

You are considering starting a walk-in clinic. Your financial projections for the first year of operations...

You are considering starting a walk-in clinic. Your financial projections for the first year of operations are as follows: Revenue (10000 visits) $383,255 Wages and benefit $206,036 Rent $5,288 Depreciation $31,123 Utilities $2,481 Medical supplies $50,702 Administrative supplies $9,964 Assume that all costs are fixed, except supply costs, which are variable. Furthermore, assume that the clinic must pay taxes at a 31 percent rate. What number of visits is required to provide you with an after-tax profit of $85,658?

Subjects