James used $250,000 from his savings account that paid an annual interest of 15% to purchase a hardware store.After one year,James sold the business for 320,000.An economist calculated his profit to be:

Question

Quizplus · Accepted Answer

James's profit is calculated by subtracting the opportunity cost (interest he would have earned) from the sale price minus the purchase price. The opportunity cost is $250,000 * 15% = $37,500. The sale price minus the purchase price is $320,000 - $250,000 = $70,000. Therefore, the profit is $70,000 - $37,500 = $32,500.

James Used $250,000 from His Savings Account That Paid an Annual