Q1. The current bank interest rate is 5 percent. You borrow $10,000 from the bank as well as invest $20,000 of your own money in a new business for a year. Detail the obvious costs and the implicit costs (hidden opportunity costs) for both amounts of money you are investing.
Q2. If your business earns accounting profits of $50,000 and economic profits of $20,000, what are your hidden opportunity costs?
Q3. You earn a good salary, but you hate your boss. You develop a plan to start your own business that projects economic profits of $5,000 at the end of the first year. But just as you are about to go ahead with your new business, you are offered a job for $15,000 more than you were earning before. How does that change your projected economic profits? Would it change your decision to start your new business? Why or why not?