Use the Following to Answer Questions

question 145

Multiple Choice

Use the following to answer questions :
Scenario: Accounting and Economic Profit
Rather than put the $100 000 that his grandmother left him in a mutual fund that earns 5% each year,Tommy Wang quit his job,which paid $60 000 per year,and started Wang's Wicker Furniture Store.He rented a showroom for $20 000 for the year,purchased $60 000 in wicker furniture,and incurred costs of $40 000 for sales help and advertising.In his first year,his revenue was $150 000.
-(Scenario: Accounting and Economic Profit) Use Scenario: Accounting and Economic Profit.What is the opportunity cost of Wang's $100 000 inheritance being used to start his business?

• A) $0
• B) $5 000
• C) $10 000
• D) $100 000

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Definitions:

Bonds

Bonds are fixed income instruments representing a loan made by an investor to a borrower, typically corporates or governments, which pay periodic interest payments and return the principal at maturity.

Security Analysis

The examination and evaluation of the various factors affecting the value of securities, such as stocks and bonds, to make investment decisions.

Professional Analysts

Professionals who conduct detailed examination and evaluation of various aspects in finance, economics, or other specialized fields.

C-corporations

A legal structure for a corporation in which the owners, or shareholders, are taxed separately from the entity, providing liability protection for the owners.