Scenario 14-4 Victor Is the Recipient of $1 Million from a Lawsuit

question 106

Multiple Choice

Scenario 14-4
Victor is the recipient of $1 million from a lawsuit. Victor decides to use the money to purchase a small business in Florida. His business operates in a perfectly competitive industry. If Victor would have invested the $1 million in a risk-free bond fund, he could have earned $100,000 each year. After he bought the small business, Victor quit his job as a market analyst with Research, Inc., where he used to earn $75,000 per year.
-Refer to Scenario 14-4. How large would Victor's accounting profits need to be to allow him to attain zero economic profit?

• A)$100,000
• B)$125,000
• C)$175,000
• D)$225,000

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Definitions:

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