Suppose That You Open Your Own Business and Earn an Accounting

Multiple Choice

Suppose that you open your own business and earn an accounting profit of $40,000 per year. When you started your business, you left a job that paid you a $25,000 salary annually. Also, suppose that you invested $70,000 of your own funds to start up your business. If the normal rate of return on capital is 5 percent, your economic profit is

A) $15,000.
B) -$11,500.
C) $11,500.
D) -$55,000.