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Marquis quits his job as a security consultant, which paid an annual salary of $65,000, and opened his own security company. He used $40,000 of a mutual fund that paid a 4% annual interest rate to buy a truck. In his first year of operation, he spent $100,000 on equipment and licensing and earned a total revenue of $210,000. Marquis's accounting profit is _____, and his economic profit is _____.

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ogorwyne

From the calculations that have been done in this question, Marquis's accounting profit is 108,400, his economic profit is 43,400

How to solve for Marquis's accounting profit

Formula for Accounting profit

TR - Total explicit cost - Interest

= 210,000 - 100,000 - 40,000 * 4%

= 108,400

Therefore the total accounting cost is  108,400

How to solve for Marquis's economic profit

Formula = TR - Total explicit cost - Interest - Total implicit cost

= 210,000 - 100,000 - 40,000 * 4% -65,000

= 43,400

Therefore the total economic profit is given as $43,400

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