Harvey quit his job at State University where he earned $45,000 a year. He figures his entrepreneurial talent or forgone entrepreneurial
Harvey quit his job at State University, where he earned an annual salary of $45,000. He estimates his entrepreneurial talent or forgone entrepreneurial income to be $5,000 per year. To start his business, he cashed in $100,000 worth of bonds that earned 10% interest annually to purchase a software company called Extreme Gaming. In the first year, the firm sold 11,000 units of software at a price of $75 each. Of the $75 per unit, $55 is allocated to cover the costs of production, packaging, marketing, employee wages and benefits, and rent for the building. What is the accounting profit generated by Extreme Gaming in its first year?
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