Economic Profit = Total Revenue - Total Costs
= Quantity * Price - Quantity * Average cost
= Q(P- AC)
Since economic profit is positive, it can be mentioned that P- AC is positive which tells us that P>AC or price is greater than Average cost.
What you mean by economic profit?
- The difference between the money made from selling an output and the price of all the inputs plus any opportunity costs is what is known as an economic profit or loss.
- Economic profit is determined by subtracting opportunity costs and explicit costs from earned income.
What is the role of economic profit?
- Economic profit is important since it makes it possible to evaluate the profitability and financial performance of a company.
- It demonstrates a company's ability to pay its bills and generate profit for its investors. By this standard, brands are only deemed successful when they generate income for all parties.
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<u>Revenue</u> is the term for the monetary value of all resources that come into the firm from operating activities.
<h3>
What is Revenue?</h3>
Revenue is the money made from regular business operations and is calculated by multiplying the average sales price by the number of units sold. In order to calculate net income, costs must be deducted from the top-line (or gross income) figure. On the income statement, revenue is also known as sales. A company's revenue is the money generated by its operations. Depending on the chosen accounting method, there are several ways to calculate revenue. Sales made with a credit card will be counted as revenue for goods or services that were delivered to the customer. In accordance with some regulations, revenue is recorded even if payment has not yet been made.
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Answer:
$1,102,820
Explanation:
The computation of the net present value is shown below:
= Present value of yearly cash inflows - initial investment
where,
Present value of yearly cash inflows is
= Annual year cash inflows × PVIFA factor
= $300,000 × 2.9906
= $897,180
And, the initial investment is
= $1,500,000 + $500,000
= $2,000,000
So the net present value is
= $897,180 - $2,000,000
= $1,102,820
Available Options Are:
A. =SUM(G12:G16).
B. =SUMPRODUCT(B3:F7, B12:F16)
C. SUMPRODUCT(B3:F7, B12:F16).
D. =SUM(B12:F16)
Answer:
Option B. =SUMPRODUCT(B3:F7, B12:F16)
Explanation:
Here we need summation of two rows B3:F7 and B12:F16. The formula that we will use will be SUMPRODUCT. To calculate sum product in I3 we will edit equal sign first and then "SUMPRODUCT(,)". Then complete the rows that we want to add. Before the coma sign we will place the first row which is B3:F7 and after the coma sign we will place the second row which is B12:F16. In this way we would compute the summation of values present in both rows.
This means that only Option B is correct here.
Option A is not correct because it is the summation of cells present in a single column which doesn't include any cost item assigned. Hence it is incorrect as the formula must be the summation of 2 rows.
Option C is incorrect because it doesn't includes equal sign at the start.
Option D is incorrect because it is only the sum of a single row B12:F16, hence it is incorrect.