Question

1. (10 points) Your friend owns a cabin in the mountains. Your friend likes to keep it vacant during the year, so that your friend can drive up and enjoy the cabin any time she wants to. You tell your friend that leaving the cabin vacant must be very expensive each year. Your friend says that there is no cost because she owns the cabin. Please explain why your friend is wrong.

Answer 1

Your companion isn't as one with the shot value the lodge has in his computation. when empty, after best utilization of the lodge is to lease it to those that ar willing to utilize it for his or her get-aways. this can bring some money that is never again available because of the lodge is left abandoned. Assume that the lease it will get is $1000 every month. On the off chance that you're exploitation the lodge for a quarter of a year in one year, at that point you're not perceiving the loss of $9,000 that will be that the expense of getting the lodge. This lost winning speaks to the opportunity value that should be encased inside the examination.