Question

Assume that at the beginning of the year, Firm B divested itself of $20,000 of unproductive capital and earnings for the year fell by only $3,000. Abnormal earnings are:

Answer 1

Answer:

The correct response will be "$600".

Explanation:

The given problem is incomplete. Please find attachment of the complete query.

The given values are:

Normal earning,

= 11000

Rate of interest,

r = 8%

Now,

The abnormal earning will be:

= $Normal \ earning-Net \ income$

= $11000-((150000-20000)\times 8 \ percent)$

= $11000-((130000)\times 8 \ percent)$

= $600$ ($)