Luana gives up a salary of $80,000 per year to start her company. She invests $50,000 of her savings in her company, savings that had been earning her $4,000 per year in interest. During Luana's first year in business, total revenue is $300,000, and her explicit financial costs are $225,000. What is Luana's accounting profit from her first year in business?

Question

Quizplus · Accepted Answer

Accounting profit is calculated as total revenue minus explicit costs. Luana's total revenue is $300,000, and her explicit financial costs are $225,000. Therefore, her accounting profit is $300,000 - $225,000 = $75,000.

Luana Gives Up a Salary of $80,000 Per Year to Start