QUESTION 1 1 p I enter the tree business, in which I borrow $10,000 to pay for a

Question

QUESTION 1 1 p I enter the tree business, in which I borrow $10,000 to pay for a plot of land that contains young trees to be sold as Christmas trees in December. At the end of the year, I sell the trees, making $3,000 in revenue and can sell the land for $7,500. (Assume away any labor costs and that i have no revenue until the end of the year to pay back the loan.) If the annual interest rate was 6%, I made an: O accounting and entrepreneurial profit O accounting profit, entrepreneurial loss O accounting loss, entrepreneurial profit O accounting and entrepreneurial loss

Explanation / Answer

Correct Answer:

D

Working note:

Accounting profit = 7500+3000 - 10000 - 10000*6% = -$100 (so, there is an accounting loss)

Hence, entrepreneurial loss will also incur.

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