Dolores used to work as a high school teacher for $40,000 per year but quit in order to start her own catering business.To invest in her factory,she withdrew $20,000 from her savings,which paid 3 percent interest,and borrowed $30,000 from her uncle,whom she pays 3 percent interest per year.Last year she paid $25,000 for ingredients and had revenue of $60,000.She asked Louis the accountant and Greg the economist to calculate her profit for her.

Question

Quizplus · Accepted Answer

To calculate her profit, we need to subtract her total expenses from her revenue. Her total expenses include the cost of ingredients ($25,000) and the interest payments on her loan from her uncle ($900) and her withdrawal from her savings ($600). So her total expenses are $25,000 + $900 + $600 = $26,500.

Her revenue is $60,000, so her profit is $60,000 - $26,500 = $33,500.

Louis is incorrect because he seems to have added the interest payments to her expenses, which is incorrect. So we can eliminate choices A and D.

Greg is incorrect because he seems to have calculated her revenue as her profit, which is incorrect. So we can eliminate choice B.

Therefore, the best choice is C, which correctly calculates Dolores' profit as $34,100.

Dolores Used to Work as a High School Teacher for $40,000