Question

Ellie has been working for an engineering firm and earning an annual salary of $80,000. She decides to open her own engineering business. Her annual expenses will include $15,000 for office rent, $3,000 for equipment rental, $1,000 for supplies, $1,200 for utilities, and a $35,000 salary for a secretary/bookkeeper. Ellie will cover her start-up expenses by cashing in a $20,000 certificate of deposit on which she was earning annual interest of $500.

Ellie's annual implicit costs will equal:________
a. $55,200.
b. $75,200.
c. $80,500.
d. $165,700.

Answer 1

Ellie’s implicit will costs $55,200, all you have to do is do simple addition and add together all of the expenses.