Harvey quit his job at the University of Toronto where he earned $45,000 a year. He figures his entrepreneurial talent, or forgone entrepreneurial income, to be $5000 a year. He cashed in $100,000 in bonds that earned 10% interest annually to buy a software company, Extreme Gaming. In the first year, the firm sold 11,000 units of software at $75 per unit. Of the $75 per unit, $55 goes for the costs of production, packaging, marketing, employee wages and benefits, and rent on a building.

The accounting profit in the first year was

Question

Harvey quit his job at the University of Toronto where he earned $45,000 a year. He figures his entrepreneurial talent, or forgone entrepreneurial income, to be $5000 a year. He cashed in $100,000 in bonds that earned 10% interest annually to buy a software company, Extreme Gaming. In the first year, the firm sold 11,000 units of software at $75 per unit. Of the $75 per unit, $55 goes for the costs of production, packaging, marketing, employee wages and benefits, and rent on a building.
 
The accounting profit in the first year was