Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Business Economics Expert

Calculation of economic profit, accounting profit and decision making according to profit.

John HAS WORKED AS A CONSALTANT IN THE it INDUSTRY FOR A NUMBER OF YEARS. His annual income is $1000,000 per year. He is considering establoishing his own IT Consulting firms and expects to generate revenues of $3,475,000 during the first year. Compensation paid to other employees is expected to total $1,825,000. Other operating expenses(rent, supplies, utilities...) are equipied , office furniture etc. The capital equiped (purchased with part of the loan) will cost $1,200,000. At the end of one year, the firm could sell the equipement, office furniture maintains it value for the entire period. The monetary value to John of working for himself in his firm rather than being employed by another firm is $25,000. Unless explicity stated stated each part assumes the initial values of the original problem stated above. (In other words, useless explicity stated, each part is considered in isolation)

a. Describe pretax accounting profit for the first year of this venture.

b. Determine the pretax economic profit for this venture for the first year. Interpreted.

c. Depends on the profits in the first year , should John go ahead with this venture? describe.

d. Suppose that instead of IT market falls and John purchased the office furnished and equiped with his own funds? How would this impact your answers to part a-c? Show work and describeany assumption made.

e. Suppose the iT market falls and John and John could now hired as an IT consultant for only $60,000. How would this impact your answers to parys a-c? Which senario, e or f, is more realistic? Beiefly describe.

f. As a result of the change in market condition disscused in the part e. Jo0hn\'s l;abour expense for other employees is now 85% of the original total. John\'s salary is cionsidered with the conditions descriped inpart e.

g. Assume intersted of e, that the IT market rebounds and that John could now be highered in as an IT Consultant for $13,000. Disscuss How an implement impact your answers to pat a-c.

h. In this worls problrem we have made a number of simplifyng assumptions. Suggest two factories whick would make this problem more realisytic and might impact John\'sdecision to operate/shutdown his consultinbg bussiness. Elucidate how each ecconomic profit. You nees not us ethe actual numbers in measuring th effects.)

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M922603

Have any Question? 


Related Questions in Business Economics

Assignmentyou must submit 2 files to this link once done as

Assignment You must submit 2 files to this link once done as follows: Part 1) An MS Excel spreadsheet (.xls or .xlsx no other file formats will be accepted) use the dataset spreadsheet provided for the assignment and inc ...

Chapter 1 managing changeq1 figure 176 shows how bad an

Chapter 1 Managing change Q1 Figure 1.76 shows how bad an implementation can become. Action needs to be taken to prevent this kind of situation. What would you recommend should be done? Q2 You are the project manager for ...

Assignmentmoral and ethical requirements should serve as

Assignment Moral and ethical requirements should serve as drivers which encourage a business to invest in or spend money on cybersecurity products, services, and programs. You have been invited to participate in a "light ...

In the united states as in most countries we value the

In the United States, as in most countries, we value the benefits of a free and competitive market. This suggests an interesting question: what if there were to be no Antitrust laws or other regulations on business activ ...

Cite the sources used to answer this question provide the

Cite the source(s) used to answer this question. Provide the source(s) below your response and apply APA guidelines for references. 1) Class, is it possible for a business to show an accounting profit, but actually earn ...

Free trade and restricted trade - benefits and cost1-2

Free Trade and Restricted Trade - Benefits and Cost 1-2 paragraphs APA format/ no plagarism Using your own words, define both free and restricted trade. What do you feel are the benefits and the cost to having free trade ...

Assignmentarticle reportplease select a marketing topic you

Assignment Article Report Please select a marketing topic you learned and then search in the Wall Street Journal (either online or hardcopy *) and select an article about that topic within the last 12 months. To do this, ...

Assignmentinstructions1 select an illegal activity and

Assignment Instructions 1. Select an illegal activity and transform/mask its' true purpose with the disguise of a legitimate business operation. In other words, create a start-up business that would be viewed as a legal ...

Assessment task descriptiontopicstudents will be required

ASSESSMENT TASK: DESCRIPTION Topic Students will be required to choose a specific enterprise (it should ideally be one with which they are somewhat familiar) and develop a sustainability indicators monitoring system for ...

What is the relationship between economy business and

What is the relationship between economy, business, and society? -6 page essay (includes only ONE page for references,but the cover page is not included in the 6 page requirement) -Double spaced -APA format

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro

Describe what you learned about the impact of economic

Describe what you learned about the impact of economic, social, and demographic trends affecting the US labor environmen