Walter used to work as a high school teacher for $40,000 per year but quit in order to start his own painting business. To invest in his painting business, he withdrew $20,000 from his savings, which paid 3 percent interest, and borrowed $30,000 from his uncle, whom he pays 3 percent interest per year. Last year Walter paid $25,000 for supplies and had revenue of $60,000. Walter asked Tyler the accountant and Greg the economist to calculate his painting business's profit.
A)Tyler says his profit is $25,900, and Greg says his profit is $66,500.
B)Tyler says his profit is $35,000, and Greg says he lost $5,900.
C)Tyler says his profit is $34,100, and Greg says he lost $6,500.
D)Tyler says his profit is $34,100, and Greg says his profit is $34,100.

Question

Quizplus · Accepted Answer

To calculate Walter's profit, we need to subtract his expenses from his revenue. His expenses are:
- $25,000 for supplies
- $20,000 he withdrew from his savings (with 3% interest) 
- $30,000 he borrowed from his uncle (with 3% interest)

The interest on his savings is: $20,000 x 0.03 = $600
The interest on his loan is: $30,000 x 0.03 = $900

So his total expenses are: $25,000 + $20,600 + $900 = $46,500

His revenue is $60,000

Therefore, his profit is: $60,000 - $46,500 = $13,500

Both Tyler's and Greg's answers are incorrect, so we can eliminate answer choices A, B, and D. The correct answer is choice C, Tyler says his profit is $34,100, and Greg says he lost $6,500, but neither of these answers are correct.

Walter Used to Work as a High School Teacher for $40,000