10. Jonathan currently is a brew master for Acme Brewery He really enjoys his jo
ID: 2382515 • Letter: 1
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10. Jonathan currently is a brew master for Acme Brewery He really enjoys his job, but is intrigued by the prospect of quitting and starting his own brewery. He currently makes dollar62,000 at Acme Brewery. Jonathan anticipates that his new brewery will have annual revenues of dollar230,000, and total annual expenses for operating the brewery, out side of any payments to Jonathan, will be dollar190,000. Jonathan comes to you with his idea. He believes that he would be equally happy with either option, but that starting his own brewery is the right decision in light of its profitability Ignoring what might happen beyond the first year, do you agree with him? Why or why not?Explanation / Answer
Statement showing evaluation of propsal Particulars Own Bus Emp Diff Salary 62,000.00 (62,000.00) Annual Revenues 230,000.00 230,000.00 Annual Expenses (190,000.00) (190,000.00) Net profit or Income 40,000.00 62,000.00 (22,000.00) No we don’t agree with Jonathan as in the first year itself he is suffering loss of 22,000(62,000-40,000) if compared to his present salary. Thus ignoring what might happen beyond first year it is not right decision to start his own bakery
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