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sveticcg [70]
3 years ago
9

Suppose Natasha currently makes $50,000 per year working as a manager at a cable TV company. She then develops two possible entr

epreneurial business opportunities. In one, she will quit her job to start an organic soap company. In the other, she will try to develop an Internet-based competitor to the local cable company. For the soap-making opportunity, she anticipates annual revenue of $465,000 and costs for the necessary land, labor, and capital of $395,000 per year. For the Internet opportunity, she anticipates costs for land, labor, and capital of $3,250,000 per year as compared to revenues of $3,275,000 per year. What opportunity should she pursue?
Business
1 answer:
Vilka [71]3 years ago
4 0

Answer:

It will be better to pursue the soap business as it provide a 20,000 economic gain.

Explanation:

currently Natasha wages: $50,000

soap business:

sales revenue 465,000 - cost = 395,000 = 70,000 accounting profit

less 50,000 opportunity cost: 20,000 economic gain

Internet opportunity as it will compete with the local TV company shw currently works, most probably will be fired or quit the job.

3,275,000 revenues - 3,250,000 cost = 25,000 accounting profit

less 50,000 opportunity cost: (25,000) economic loss

It will be better to pursue the soap business as it provide a 20,000 economic gain.

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Answer:

a) $1,918.17

b) 16.8 months

C) Yes, Capstone Turbine will remain in business.

Explanation:

a) To find the monthly cash expenses, we have:

Monthly cash expenses = negative cash flow from operations / 12

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b) To find the ratio of cash to monthly cash expenses, we have:

Ratio of cash to monthly cash expenses = Year end cash / monthly cash expenses

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6 0
3 years ago
"Dan Druff Shampoo has 1,000,000 shares of common stock authorized with a par of $1 per share, of which 500,000 shares are outst
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8 0
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4 0
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