Compute the bowens accounting profits

Reference no: EM13213292

howard bowen is a large-scale cotton farmer. the land and machinery he owns has a current market vlaue of $4 million. bowen owes his local bank $3 million. last year bowen sold $ 5 million worth of cotton. his variable operating costs were $4.5 million; accounting depreciation was $40,000, although the actual decline in value of bowen's machinery was $60,000 last year. bowen paid himself a salary of $50,000, which is not considered part of his variable operating costs. interest on his bank laon was $40,000. if bowen worked for another farmer or a local manufacturer, his annual income would be about $30,000. bowen can invest any funds that would be derived, if the farm were sold, to earn 10 percent annually. ( ignore taxes.) a. compute bowen's accounting profits.

Reference no: EM13213292

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