Shops equipment at an annual interest rate

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Reference no: EM13789005

Last year, Jarod left a job that pays $80,000 to run his own bike-repair shop. Jarod’s shop charges $65 for a repair, and last year the shop performed 5,000 repairs. Jarrod’s production costs for the year included rent, wages, and equipment. Jarod spent $60,000 on rent and $100,000 on wages for his employees. Jarod keeps whatever profit the shop earns, but does not pay himself an official wage. Jarod borrowed $30,000 for the shop’s equipment at an annual interest rate of 4 percent.

Please solve for Jarod's accounting profit

Please solve for Jarod's economic profit

Reference no: EM13789005

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