Sofia owns and manages a bookstore. Following are her business' revenues and costs of the past
year:
1. The bookstore's total revenue in the past year was $150,000
II. The capital investments of this business were from the following sources:
。 $50,000 from Sofia's own funds, withdrawn from her saving account at ABC Bank.
。 $150,000's loan borrowed from ABC Bank.
• Assuming that ABC bank's interest rates for saving accounts and for loans were the same:
r = 10%.
III. Sofia is a skilled soccer player, and if she did not run her own business, she could work as a
soccer coach and earn a salary of $50,000 a year.
IV. In addition to the above items, the bookstore's all other expenditures (rents, maintenance,
and materials) added up to $60,000 a year, which required immediate cash payments.
Refer to Case 1. The explicit cost of the bookstore was $
55,000
60,000
75,000
130,000