Jen left a job paying 40000 per year to start her own floris

Jen left a job paying $40,000 per year to start her own florist shop in a building she owns. The market value of the building is $120,000. She pays $25,000 per year for flowers and other supplies, and has a bank account that pays 10 percent interest. What is the economic cost of Jen\'s business? $ . (Enter your response rounded to the nearest dollar.)

Solution

Market Value of the building = $120,000

Cost of flower and other supplies = $25,000 per year

Lost the salary = $40,000 per year

Total cost = $120,000 + $25,000 + $40,000 = $185,000

Lost interest on total cost = 10% of $185,000 = $18,500

Economic cost of business = Total cost + Loss – Gain + Interest cost

                                                    = $185,000 + $18,500 = $203,500

So Economic cost of business = $203,500