Dana, a recent graduate with a degree in economics, turned down a job offer paying $50,000 a year and instead chose to become an entrepreneur. He borrowed $15,000 from a bank at a 10 percent interest rate and that was sufficient to pay for all his equipment, materials, and labor. Dana's accountant told him that the business generated a total revenue of $70,000 in the first year. How much of a return on his entrepreneurial abilitydid Dana earn?

Question

Quizplus · Accepted Answer

Dana's return on entrepreneurial ability can be calculated by subtracting all costs (including the opportunity cost of not taking the job, interest on the loan, and the loan amount itself) from the total revenue. The total revenue is $70,000. The costs include: - Opportunity cost of not taking the job: $50,000 - Interest on the loan: 10% of $15,000 = $1,500 - Repayment of the loan: $15,000 Total costs = $50,000 + $1,500 + $15,000 = $66,500. Therefore, Dana's return on entrepreneurial ability = $70,000 - $66,500 = $3,500. However, since none of the provided options match this calculation, it appears there may have been a misunderstanding in the calculation process or an error in the provided options or question interpretation.

Dana, a Recent Graduate with a Degree in Economics, Turned