A firm pays in cash $250000 inwages, $55430 in interest on borrowed money capita

Question

A firm pays in cash $250000 inwages, $55430 in interest on borrowed money capital and $74320 forthe yearly rental of its factory building. If the entrepreneurworked for somebody else as a manager, he would earn at most $44500per year and if he lent out his money capital to somebody else in asimilarly risky business, he would at most receive $16600 per year.Keeping in view the above information:

(A)Calculate:

a) The explicitcost of the firm.

b) The implicitcost of the firm.

c) The totalcost of the firm.

(B) If theentrepreneur received $495680 from selling his years output, thencalculate his total profit.

(C) What willbe the total profit if the entrepreneur’s total revenue were$413934 instead?

Explanation / Answer

Change this line (since it has been repeated twice as a resultof copy and paste)
Cost of forgone payment he would have received working as amanger to Cost of forgone payment he would have received if lent out hiscapital Cost of forgone payment he would have received if lent out hiscapital

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