The Montgomerys are opening up a smoothie shop. Mr. Montgomery is giving up his real estate position making $150,000 a year and Mrs. Montgomery did not work outside of the home prior to the opening of the smoothie shop. The Montgomerys are renting a building in a strip mall for $17,000 per year. They anticipate spending an average of $20,000 on ingredients and appliances each year, and they anticipate revenue of $300,000 a year once they are established. Calculate the Montgomerys' annual economic profit.

Annual economic profit = $113,000

Explanation:

Given:

Expenses on Real Estate = $150,000

Building rent = $17,000

Average spending on Ingredients = $20,000

Total anticipated revenue = $300,000

Computation of annual economic profit:

Annual economic profit = Total anticipated revenue - Expenses on Real Estate - Building rent - Average spending on Ingredients

Annual economic profit = $300,000 - $150,000 - $17,000 - $20,000

Annual economic profit = $113,000

forbearance of student loan payments. under forbearance, your loan payments are postponed (or reduced) but interest continues to accrue during the period of forbearance. if you don't pay the interest during that period, the interest may be “capitalized,” which means it is added to your principal balance.

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