Question

Assume that at the beginning of the year, Firm B divested itself of $20,000 of unproductive capital and earnings for the year fell by only $3,000. Abnormal earnings are:

Answer 1

The correct response will be "$600".

Step-by-step explanation:

The given problem is incomplete. Please find attachment of the complete query.

The given values are:

Normal earning,

= 11000

Rate of interest,

r = 8%

Now,

The abnormal earning will be:

=
`Normal \ earning-Net \ income`

=
`11000-((150000-20000)* 8 \ percent)`

=
`11000-((130000)* 8 \ percent)`

=
`600` ($)