Shrimp Galore,a shrimp harvesting business in the Pacific Northwest,has a 30-year loan on its shrimp harvesting boat.The annual loan payment is $25,000 and the boat has a market (salvage) value that exceeds its outstanding loan balance.Prior to the 2008 shrimp harvesting season,Shrimp Galore's accountant predicted that at expected market prices for shrimp,Shrimp Galore would have a net loss of $75,000 dollars after paying all 2008 expenses (including the annual loan payment) .In this case,Shrimp Galore should
A) produce nothing and experience a loss of $25,000.
B) produce nothing and experience a loss of $75,000.
C) continue to operate because expected profits will rise in the future.
D) continue to operate even though it predicts a loss of $75,000.
Correct Answer:
Verified