Question

An accounting professor is considering opening his own consulting firm. To do so, she will have to quit her current job, that pays $125,000 a year, and take over a building that she owns and currently rents to her friend for $15,000 a year. Additionally, she will have to withdraw $50,000 from her savings, that pays 5 percent per year. Her expenses at the firm have been estimated as follows: $80,000 for employee salaries, $6,000 for insurance, $5,000 for utilities, and $9,000 for supplies. She anticipates annual revenues of $250,000. Determine:

Answer 1

Answer:

The answer is "$100,000"

Explanation:

Please find the complete question in the attached file.

Given value:

$\text{Employees salary}= \ 80,000\\\\\text{Insurance}= \ 6,000\\\\\text{Utility cost}=\ 5,000\\\\\text{Supplies}= \ 9,000$

$\text{Annual Explicit costs}= ?$

Formula:

$\text{Annual Explicit costs}= \bold{\text{Employees salary}+ \text{Insurance}+ \text{Utility cost}+ \text{Supplies}}$

                                   $= \ 80,000 + \ 6,000 + \ 5,000 + \ 9,000\\\\= \ 80,000 + \ 20,000\\\\= \ 100,000$