Suppose you have $10,000 in a savings account that earns 4% interest. Further, suppose you were...

Suppose you have $10,000 in a savings account that earns 4% interest. Further, suppose you were to take all $10,000 out and start a business. After a year you sell the business for $15,000

a- What is the accounting profit you made on the sale of this business?

b-What is the economic profit you made on the sale of this business?

Expert Solution

a. Accounting profit earned is $ 5,000

Explanation is as follows:

Sale of business: $ 15,000

Less: Investment made: $ 10,000

Accounting profit earned: $5,000

Reqb: Economic Profit earned is $ 4,600

Explanation is as follows:

Sale of business: $15,000

Less: Investment made: $10,000

Less: Loss of revenue in form of interest ($10,000@4%): $ 400

Economic Profit earned is: $4,600

Note: economic profit takes in to consideration theh opportunity cost of resources employed by the owner.

Rahul Sunny answered 2 years ago

Suppose you open today (year 0) a savings account with $5,000; the account earns an interest...

Suppose you open today (year 0) a savings account with $5,000; the account earns an interest of 3% APR annually. At the end of year 2 you deposit an additional $5,000 in the savings account, and then at the end of year 7 you deposit another $5,000 in the account. There is a total of 3 deposits made so far. If you did not make any withdrawals or additional deposits, then approximately what is the balance (FV) in the account...

Suppose you have a certain amount of money in a savings account that earns compound monthly...

Suppose you have a certain amount of money in a savings account that earns compound monthly interest, and you want to calculate the amount that you will have after a specific number of months. The formula is as follows: f = p * (1 + i)^t • f is the future value of the account after the specified time period. • p is the present value of the account. • i is the monthly interest rate. • t is the...

Suppose Evan deposited $10,000 into a savings account today. The account pays a nominal annual interest...

Suppose Evan deposited $10,000 into a savings account today. The account pays a nominal annual interest rate of 12%, but interest is compounded quarterly. Assuming that he makes no additional deposits into or withdrawals from the account, what will his ending balance be 10 years from today?

Suppose you deposited $10,000 in a savings account earning 3.9% interest compounding daily. How long will...

Suppose you deposited $10,000 in a savings account earning 3.9% interest compounding daily. How long will it take for the balance to grow to $21,000? Answer in years rounded to one decimal place.

Suppose you have savings of $6,697 in a bank account that paysmonthly compound interest of...

Suppose you have savings of $6,697 in a bank account that pays monthly compound interest of 1.4%. You expect towithdraw $338 per month for 9 months from your account, with the first withdrawal starting a month from now. If there are no other deposits or withdrawals, how much money will be left in your account right after your 9th withdrawal? Round your answer to the nearest $1, i.e., round to a whole number.

Suppose you have deposited $10,000 in your high-yield saving account today. The savings account pays an...

Suppose you have deposited $10,000 in your high-yield saving account today. The savings account pays an annual interest rate of 4%, compounded semi-annually. Three years from today you will withdraw R dollars. You will continue to make additional withdraws of R dollars every 6 months, until you have a zero balance after your last withdrawal 6 years from now. Find R.

1) Suppose you deposited $10,000 into a savings account today. The account pays a nominal annual...

1) Suppose you deposited $10,000 into a savings account today. The account pays a nominal annual interest rate of 12%, but interest is compounded quarterly. Assuming that you make no additional deposits into or withdrawals from the account, what will your ending balance be 10 years from today? 2) A firm expects to pay dividends at the end of each of the next four years of $2.00, $2.50, $2.50, and $3.50. If growth is then expected to be constant at 8...

An amount of $10,000 is deposited into a savings account that pays interest at a rate...

An amount of $10,000 is deposited into a savings account that pays interest at a rate of 7%. If 10 equal annual withdrawals are made from the account starting one year after the money was deposited, how much can be withdrawn so that in the fifth year one would be able to withdraw an additional $1,000 and the account would be depleted after 10 years? Explain verbally in detail and sketch a timeline to illustrate.

Suppose you want to have $800,000 for retirement in 25 years. Your account earns 5% interest....

Suppose you want to have $800,000 for retirement in 25 years. Your account earns 5% interest. a) How much would you need to deposit in the account each month? $ 1,343.39 Correct b) How much interest will you earn? $

Suppose you want to have $500,000 for retirement in 35 years. Your account earns 4.3% interest....

Suppose you want to have $500,000 for retirement in 35 years. Your account earns 4.3% interest. How much would you need to deposit in the account each month? Round your answer to the nearest cent as needed. $ How much would you need to deposit in an account each month in order to have $20,000 in the account in 9 years? Assume the account earns 2.6% interest. You have $500,000 saved for retirement. Your account earns 6.4% interest. How much...

Question