Scott used $4,000,000 from his savings account that paid an annual interest of 5% and a $60,000 loan at an annual interest rate 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% and a $60,000 loan at an annual interest rate 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

To calculate the accounting profit, we need to subtract the total expenses (including interest paid) from the total revenue.

Total revenue: $4,100,000
Total expenses: 
- Interest on savings account: 5% of $4,000,000 = $200,000
- Interest on loan: $60,000 x 5% = $3,000

Total expenses = $203,000

Accounting profit = Total revenue - Total expenses = $4,100,000 - $203,000 = $3,897,000

Therefore, the answer is C) $97,000.

​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