Annual estimates using very conservative assumptions

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Reference no: EM131005410

Agatha Christie is evaluating two options.

The first option is to start an event planning business as a self-employed. Based on business plan, she computed the following annual estimates using very conservative assumptions:

- Total revenue = $250,000

- Purchases = $145,000

- Utility costs = $37,000

Agatha will operate the business by herself. She does not plan to hire any employees in the first year. She will operate the business from her a building that she owns. The building has been paid in full.

The second option is to work for an event planning company as an employee. Her annual salary would be $44,000. She could also rent her building for $24,000 per year. Using the concepts of accounting profit and economic profit, compare and contrast the two options.

Which option is the most profitable for Agatha Christie?

Reference no: EM131005410

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