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erik [133]
3 years ago
12

Suppose a farmer in Georgia begins to grow peaches. He uses​ $1,000,000 in savings to purchase​ land, he rents equipment for ​$1

00 comma 000100,000 a​ year, and he pays workers ​$100 comma 000100,000 in wages. In​ return, he produces 100 comma 000100,000 baskets of peaches per​ year, which sell for ​$3.003.00 each. Suppose the interest rate on savings is 55 percent and that the farmer could otherwise have earned ​$25 comma 00025,000 as a shoe salesman. What is the​ farmer's economic​ profit
Business
1 answer:
mina [271]3 years ago
8 0

Answer:

-$475,000

Explanation:

Total revenue = Baskets of peaches × Price

                       = 100,000 × $3

                       = $300,000

Explicit cost:

= Rent equipment + wages

= $100,000 + $100,000

= $200,000

Implicit cost:

= Land × Interest + salesman earned

=  $1,000,000 × 0.55 + $25,000

= $575,000

Total cost = Explicit cost: + Implicit cost

                = $200,000 + $575,000

                = $775,000

Economic profit = Total revenue - Total cost

                           = $300,000 - $775,000

                           = -$475,000

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Define return economics.​
lianna [129]

Answer:

also known as a financial return, in its simplest terms, is the money made or lost on an investment over some period of time. A return can be expressed nominally as the change in dollar value of an investment over time.

Explanation:

4 0
3 years ago
George Corporation had the following transactions occur in the current year: 1. Cash sale of merchandise inventory. 2. Sale of d
timurjin [86]

Answer: Three items will appear being;

2. Sale of delivery truck at book value

5. Sale of a debt security held as an available-for-sale investment

6. Collection of loan receivable.

Explanation:

The Investment Section of the Cash Flow Statement contains activities related to investment such as the buying or selling of fixed assets and the buying or selling of other company stocks or bonds.

Out of the above therefore, there are 3 activities that would fall under this section of the Cash Flow Statement.

They are;

2. Sale of delivery truck at book value.

- This refers to the sale of a Fixed asset and as such it goes to the investment section.

5. Sale of a debt security held as an available-for-sale investment.

- As a debt security of another firm that was considered available for sale, this goes to the Investment Section as well.

6. Collection of loan receivable.

- Finally, collection of loan receivable means that the company loaned money to another company making it an investment related cash inflow as it is a long term Investment income source.

7 0
3 years ago
Lardo Inc. plans to build a new manufacturing plant in either Country X or Country Y. It projects gross revenue in either locati
Tom [10]

Answer:

Following are the solution to the given points:

Explanation:

For point a:

After-tax profit for each country.

For Country X:

Particulars \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \  \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ Amount(\$)\\\\Gross \ \ Revenue\ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \  \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 4,000,000\\\\ Operating\ \ Expenses \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \  \ \ \ \ \ \ \ \ \ \ \ \ \ \  1,500,000\\\\ Pre-tax \ \ Profit \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 2,500,000 \\\\  

Tax \ [ 2,500,000 \times 20\% \ ] \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \  \ \ \ \ \ \ \ \ \ \ \ \ \ \ 500,000\\\\ After-tax\ \ profit\ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 2,000,000

For Country Y:

Particulars \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \  \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ Amount(\$)\\\\Gross \ \ Revenue\ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \  \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ 4,000,000 \\\\Operating\ \ Expenses \ \ \ \ \ \ \ \ \ \ \ \ \ \  \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \  1,800,000\\\\

Pre-tax\ \ Profit \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \  \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \  2,200,000\\\\Tax\  [40,00,000 \times 10\%] \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \  \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \  400,000 \\\\After-tax\ \ profit \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \  \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \ \  1,800,000

For point b:

For Country X:

Lardo is expected to establish its new plant in Country X, because Country X's after tax income is higher than Country y's after-tax income [$1,800,000].

3 0
3 years ago
A firm will exit a competitive market when A. costs force the marginal cost curve to shift to the left. B. the longrun profit wo
kakasveta [241]

Answer:

B. the longrun profit would be negative.

Explanation:

A perfect competition is characterized by many buyers and sellers of homogenous goods and services. Market prices are set by the forces of demand and supply. There are no barriers to entry or exit of firms into the industry.  

In the long run, firms earn zero economic profit.  If in the short run firms are earning economic profit, in the long run firms would enter into the industry. This would drive economic profit to zero.  

Also, if in the short run, firms are earning economic loss, in the long run, firms would exit the industry until economic profit falls to zero.  

A firm would shut down in the short run if price is less than average variable cost and exit if it  is making a loss

4 0
3 years ago
Southwestern Bank offers to lend you $50,000 at a nominal rate of 6.9%, compounded monthly. The loan (principal plus interest) m
san4es73 [151]

Answer:

0.98%

Explanation:

Note: Options provided is slightly different for this question

EAR = (1+APR/m)^m - 1  

EAR = (1+0.069/12)^12 - 1

EAR = (1.00575)^12 - 1

EAR = 1.07122449517 - 1

EAR = 7.12%

Hence, higher EAR  charged by Woodburn versus the rate charged by Southwestern = (8.1% - 7.12%) = 0.98%

5 0
3 years ago
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