Scott used $4,000,000 from his savings account that paid an annual interest of 5% to purchase a hardware store.After one year,Scott sold the business for $4,100,000. His accounting profits is:

Question

​Scott used $4,000,000 from his savings account that paid an annual interest of 5% to purchase a hardware store.After one year,Scott sold the business for $4,100,000. His accounting profits is:

Quizplus · Accepted Answer

Scott's initial investment was $4,000,000 with an annual interest of 5%. So, his one-year interest income would be:

$4,000,000 x 5% = $200,000

After one year, Scott sold the business for $4,100,000. So, his accounting profit would be:

Accounting Profit = Selling Price - Purchase Price
Accounting Profit = $4,100,000 - $4,000,000
Accounting Profit = $100,000

Therefore, the correct answer is B) $100,000, which represents Scott's accounting profit after selling the hardware store.

​Scott Used $4,000,000 from His Savings Account That Paid an Annual

Scott Used $4,000,000 from His Savings Account That Paid an Annual