Scenario 13-9
Ellie has been working for an engineering firm and earning an annual salary of $80,000. She decides to open her own engineering business. Her annual expenses will include $15,000 for office rent, $3,000 for equipment rental, $1,000 for supplies, $1,200 for utilities, and a $35,000 salary for a secretary/bookkeeper. Ellie will cover her start-up expenses by cashing in a $20,000 certificate of deposit on which she was earning annual interest of $500.
-Refer to Scenario 13-9. Ellie's annual implicit costs will equal
A)$55,200.
B)$75,200.
C)$80,500.
D)$165,700.

Question

Quizplus · Accepted Answer

Ellie's implicit costs include the forgone salary of $80,000 and the forgone interest of $500 from the certificate of deposit, totaling $80,500.

Scenario 13-9 Ellie Has Been Working for an Engineering Firm and Earning