Question - An owner can lease her building for $100,000 per year for three years. The explicit cost of maintaining the building is $35,000, and the implicit cost is $50,000. All revenues are received, and costs are borne, at the end of each year. If the interest rate is 4 percent, calculate the present value of the stream of flow. (Hint: you need to calculate the revenue and cost at the end of each three years and discounted all those streams back to the present value at present interest rate))
a. Accounting profits
b. Economic profits