Sunday, September 11, 2011

A recent college graduate has the choice of buying a new auto for $20,000 or investing the money for four years with a 6% expected rate of return

ACCOUNTING

Multiple Choice

A recent college graduate has the choice of buying a new auto for $20,000 or investing the money for four years with a 6% expected rate of return. If the graduate decides to purchase the auto, the BEST estimate of the opportunity cost of that decision is

a. $1,200.

b. $4,800.

c. $20,000.

d. zero since there is no opportunity cost for this decision.


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