Depreciation and opportunity cost of capital | Microeconomics | Khan Academy

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How to account for things when you own the building instead of renting it

Microeconomics on Khan Academy: Topics covered in a traditional college level introductory microeconomics course

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Thanks you very much, it is a great video!

eelcozuidervaart

Why is the $2m house expense not accounted for in either the economic or accounting profit calculations?

yellowishdog

no property value goes down because its second hand after one year of use... only the value of the land goes up and if u renovate the property then its value goes up

jackuy

Economic profit: the loss would probably be higher if you calculate in amortization and interest costs? I just assume a lot of real estate buyers use debt financing as part of the purchase? Just a thought.

DinkerTinker

Why doesn't the Building cost (2M) doesn't goes in the Expenses for that Year? Wasn't that an investment in that business, and therefor it should affect both profits and be on a very negative value for that year?

dpatulea

At 1:32 the closed captions do not say 2 million dollars.

AlvinGuoSubscribe

So if I have the money up front it's probably more profitable to rent a property.
if I have to take out a loan to invest in other risky heavily monitored investments at 10 percent would you take such a risk? What would be your minimum threshold of held assets? Would 1 million be enough to risk another million in loan money?

ubentu