An individual leaves a college faculty, where she was earning $\mathrm{\backslash (}80,000$a year, to begin a new venture. She invests her savings of $\mathrm{\backslash )}20,000$, which were earning $10$percent annually. She then spends $\mathrm{\backslash (}40,000$renting office equipment, hires two students at $\mathrm{\backslash )}30,000$a year each, rents office space for $\mathrm{\backslash (}24,000$, and has other variable expenses of $\mathrm{\backslash )}80,000$. At the end of the year, her revenues are $\mathrm{\$}400,000$. What are her accounting profit and her economic profit for the year?

The amount of money earned after both explicit and implicit costs have been taken into account is referred to as economic profit. Accounting profit refers to a company's net income, or revenue less expenses. Total costs are subtracted from a company's or investment's total income or return to calculate economic profit.

Accounting profit = total revenue minus explicit costs.

The total revenue = $\$400,000$

The explicit cost =$\$264,000(40,000+24,000+80,000+120,000=264,000)$The profit in accounting =$\$136,000(400,000-264,000=136,000)$

Accounting profit = total revenue minus explicit cost.

The total revenue =$\$400,000$

The explicit cost =$\$264,000(40,000+24,000+80,000+120,000=264,000)$The implicit cost =$\$102,000(80,000+20,000+10\%(20,000)=102,000)$The profit in economic = $\$34,000(400,000-264,000-102,000=34,000)$