Reference no: EM132618068

Geraldine wanted a compensation for risk bearing of $8,000 in order to run a tuition centre. Geraldine pays the rent of $4,000 a year, and her total revenue is $18,000 a year. She has also sacrificed $4,000 a year rental income she could have earned by renting her own building to someone else. She borrowed $1,000 at 10 per cent a year to buy tuition centre furniture. Depreciation costs were negligible. Calculate Geraldine's annual explicit costs, implicit cost and economic profit.