You Have Opened Your Own Word-Processing Service

question 2

Essay

You have opened your own word-processing service.You bought a personal computer,and paid $5,000 for it.However,due to the cost changes in the computer industry,the current price of an equivalent machine is $2,500.You could sell any used machine for $1,000.If you were not word processing,you could earn $20,000 per year at an alternative job.Assume that the interest rate is 10%.You can also hire an assistant who can do everything that you can do for $20,000 per year (you would still continue to do word processing).
One person using one computer can produce 11,000 typed pages per year,and the price per page for your service is $2.
You are considering three options: (1)expand your business by hiring an assistant; (2)leave your business the way it is; (3)shut down.Based on the costs and revenues above,which should you do? Explain and show any relevant calculations.

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Definitions:

IFRS

The International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board (IASB) that is intended to become the global standard for the preparation of public company financial statements.

IOSCO

Stands for the International Organization of Securities Commissions, which is a global body that sets standards for regulating securities and futures markets.

Convergence

In financial contexts, it can refer to the efforts to harmonize international accounting standards and practices, reducing differences between region-specific frameworks.

FASB

The Financial Accounting Standards Board, an organization responsible for establishing and improving accounting standards within the United States.