Samantha Roberts has a job as a pharmacist earning $30,000 per year, and she is deciding whether to take another job as the manager of another pharmacy for $40,000 per year or to purchase a pharmacy that generates a revenue of $200,000 per year. To purchase the pharmacy, Samantha would have to use her $20,000 savings and borrow another $80,000 at an interest rate of 10 percent per year. The pharmacy that Samantha is contemplating purchasing has additional expenses of $80,000
for supplies, $40,000 for hired help, $10,000 for rent, and $5,000 for utilities. Assume that income and business taxes are zero and that the repayment of the principal of the loan does not start before three years.

(a) What would be the business and economic profit if Samantha purchased the pharmacy? Should Samantha purchase the pharmacy?

(b) Suppose that Samantha expects that another pharmacy will open nearby at the end of three years and that this will drive the economic profit of the pharmacy to zero. What would the revenue of the pharmacy be in three years?

(c) What theory of profit would account for profits being earned by the pharmacy during the first three years of operation?

(d) Suppose that Samantha expects to sell the pharmacy at the end of three years for $50,000 more than the price she paid for it and that she requires a 15 percent return on her investment. Should she still purchase the pharmacy?


  1. 👍
  2. 👎
  3. 👁
  1. Hello, How I can find the answer of this question?

    1. 👍
    2. 👎

Respond to this Question

First Name

Your Response

Similar Questions

  1. Math

    Find a(7) in the geometric series in which S(5) = -61 and the common ratio is -3. -729 -574 2,680 2,188 Jamison just started a new job as a firefighter earning an annual salary for 38,500.00. his contract states that he will

  2. MATH

    1. An employee put $5,000.00 in a retirement account that offers 9% interest compounded annually. The employee makes no additional deposits or withdrawals. Which amount is closest to the interest the employee will have earned at

  3. college algebra

    A doctor prescribes an ointment that is 4% hydrocortisone. A pharmacist has 1% and 5% concentrations in stock. How many ounces of each should the pharmacist use to make a 3-ounce tube?

  4. Economics

    I got a lot of problems with this exercise. I really hope you can help me. Thanks! Samantha Roberts has a job as a pharmacist earning $30.000 per year, and she is deciding whether to take another job as the manager of another

  1. Algebra

    Justine earned $26,000 during the first year of her job at city hall. After each year she received a 3% raise. Find her total earnings during the first five years on the job.

  2. Math

    A company is deciding between two different car models as it updates its fleet of cars. The purchase price for model A is $30,000, and the price for model B is $35,000. However, model A has an average gas mileage of 27 miles per

  3. Finance

    A job pays a salary of 35,000 the first year. During the next 10 years, the salary increases by 4% each year. What is the salary for the 11th year? What is the total salary over the 11 year period? (Round to the nearest cent.)

  4. Probability

    A survey of 1,200 men and women asked, "Do you earn over $75,000 per year?" The table below shows the responses for males and females. Male Female Total Income over $75,000 585 485 1,070 Income below $75,000 65 65 130 Total 650

  1. Functions

    janice gets a job and starts out earning $9.25 her boss promises her a raise of $0.15/h after each month of work. when will janice start earning at least twice her starting wage?

  2. finance management

    John Roberts has $42,180.53 in a brokerage account, and he plans to contribute an addtional $5,000.00 to the account at the end of the year. the brokerage account has an expected annual return of 12%. If John's goal is to

  3. Consumer Math

    Please help :) 1.You get a part-time job earning $8.60/hr. Tips are $3.25/hr on average. You work for 15 hours. What is your gross base pay? 2. You are paid $9.25/hr at your part-time job. You are considering working a part-time

  4. Urgent math

    A man gets a job with a salary of $40,000 a year. He is promised a $1900 raise each subsequent year. Find his total earnings for a 10-year period. I got 59,000 and it is wrong what it the correct answer?

You can view more similar questions or ask a new question.