Question 1
Melati turns down a job offer of RM28,000 per year to start her own business. She will
invest RM45,000 of her own money, which has been in a bank account earning 8% in
interest per year. She also plans to borrow RM35,000 at an interest of 12% per year.
She will be using her own building that has been rented to another business for
RM1,800 per month. Revenue during the first year was RM135,200 while other yearly
operating expenses amounted to RM61,000. Based on the information given, calculate
the accounting profit, economics profit and advise her if she should start her own
business. Also calculate the economic cost.

(10 marks)