What is the firms economic depreciation

Assignment Help Business Economics

Reference no: EM13998456

Two university graduates, Bill and Steve, worked for an advertising agency at an annual salary of $40,000 each for 3 years after they graduated. Then, they decided to quit their jobs and start a partnership that designs and builds Web sites. They rented an office for $12,000 a year and bought capital for $30,000. To pay for the equipment, Bill and Steve borrowed money from a bank at an annual interest rate of 6 percent. During their first year of operation, the partners' total revenue was $100,000. The market value of their capital at the end of the year was $20,000. If Bill and Steve do not design Web pages, their best alternatives are to return to their previous job.

A. What is the firm's economic depreciation?

B. What are the partnership's costs?

C. What is the firm's economic profit in the first year of operation?

Reference no: EM13998456

Questions Cloud

Regulate the pollution that is put into the environment : Why does the government have to regulate the pollution that is put into the environment? What type of externality is pollution and why is society not able to bring about equilibrium in markets?

The war against the poor instead of programs to end poverty : Summarize the article "The war against the poor instead of programs to end poverty" by Herbert J.Gans in 400 words by following these steps: How the economy, the government and the political climate have participated in the war against the poor? Writ..

Suppose the market for gasoline is in equilibrium : Suppose the market for gasoline is in equilibrium. Draw a diagram below of such a market. Next, suppose that it is found that com can be used to produce ethanol, which can be added to gasoline, effectively adding to the amount of gasoline available. ..

Suppose there is a market for hotdogs in equilibrium : Suppose there is a market for hotdogs in equilibrium. Draw a diagram below of such a market. Now, suppose that the price of hamburgers suddenly falls sharply, making it easier and more enticing for consumers to purchase hamburgers than before. Show o..

What is the firms economic depreciation : Two university graduates, Bill and Steve, worked for an advertising agency at an annual salary of $40,000 each for 3 years after they graduated. Then, they decided to quit their jobs and start a partnership that designs and builds Web sites. What is ..

Knowledge management in organizations : Knowledge Management in Organizations, In this individual assignment, you are going to pick one knowledge management topic from the following list. You need to produce written report.

Is marginal cost higher-lower for firm with high fixed costs : Suppose that an industry has high fixed costs to enter but, other than that, is competitive. What will be the effect of the high fixed costs to the number of firms in the industry? To the firm size ? Is marginal cost higher or lower for a firm with h..

Competitive firms are price takers : We assume that competitive firms are "price takers." Explain what this means. What is keeping competitive firms from setting prices? Is this a plausible assumption? For which industries is it a likely assumption? For which is it not plausible?

Need to find the annual net revenue that yeilds : Owner of a haulage business is planning to invest in a new eighteen wheeler that costs $180,000, use it for 5 years and then sell it off for $90,000 dollars. At 7% interest rate, how much net revenue the investment has to at least produce each year t..

User Account

All Pages