Amy used to work as a high school teacher for $40,000 per year
but quit in order to start her own catering business. To buy the
necessary equipment, she withdrew $20,000 from her savings, (which
paid 3 percent interest) and borrowed $30,000 from her uncle (like
the problem done in class, assume she does not make any principle
payments on this loan), whom she pays 3 percent interest per year.
Last year she paid $25,000 for ingredients and had revenue of
$60,000. She asked Chris the accountant and Bobbie the economist to
calculate her profit for her.
Chris says her profit is $35,000 and Bobbie says her profit is
5,000.
Chris says her profit is $33,500 and Bobbie says her profit is
$6,500.