A business is considering a cash outlay of $250,000 for thepurchase of land, whi

Question

A business is considering a cash outlay of $250,000 for thepurchase of land, which it intends to lease for $40,000 per year.If alternative investments are available which yield an 18% return,the opportunity cost of the purchase of the land is:
a. $45,000 b. $37,800 c. $47,200 d. $7,200 A business is considering a cash outlay of $250,000 for thepurchase of land, which it intends to lease for $40,000 per year.If alternative investments are available which yield an 18% return,the opportunity cost of the purchase of the land is:
a. $45,000 b. $37,800 c. $47,200 d. $7,200

Explanation / Answer

A business is considering a cash outlay of $250,000 for thepurchase of land, which it intends to lease for $40,000 per year.If alternative investments are available which yield an 18% return,the opportunity cost of the purchase of the land is:
a. $45,000 >>>>> [MAKE SENSE TO ME]
b. $37,800 c. $47,200 d. $7,200

Opportunity Cost is the difference between one business decisionand another and the cost difference between them.

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