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 $62,000 at Acme Brewery. Jonathan anticipates that his new brewery will have annual revenues of $230,000 and total annual expenses for operating the brewer, outside of any payments to Jonathan, he will be $190,000. 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 choice in light of its profitability. Ignoring what might happen beyond the first year, do you agree with him? Why or why not?

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Originally Posted by jresendiz

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 $62,000 at Acme Brewery. Jonathan anticipates that his new brewery will have annual revenues of $230,000 and total annual expenses for operating the brewer, outside of any payments to Jonathan, he will be $190,000. 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 choice in light of its profitability. Ignoring what might happen beyond the first year, do you agree with him? Why or why not?

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It seems he wants to take greater risk for $22000 less, this would seem to be a no brainer, like you don't need an accountant to answer this question but you cannot ignore when making a decision like this what might happen in subsequent years. Do I agree with him that a fool and his money are soon parted, yes!

If this is the standard of questions get a new course, it can only get harder from here