Kris is deciding about returning to university. His current salary is $40,000 per year. The cost...
Kris is deciding about returning to university. His current salary is $40,000 per year. The cost of his school tuition will be $5,000 per term with two terms per year. Ignoring the time value of money, what is the opportunity cost for Kris if he returns to university?
Select one:
$40,000
$50,000
$160,000
$200,000
Homework Answers
- Opportunity Cost is the Cost of second best alternative that has been given up.
- In the question if Kris returns to University, his cost will be $ 10,000 per year ($ 5000 x 2 terms)
- Plus, he will not get $ 40,000 per year that he is earning right now.
- This $ 40,000 will be given up by him and will become Opportunity Cost.
- Correct Answer = Option #1: $ 40,000
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