A recent college graduate has the choice of buying a new car for $33,500 or investing the money for four years with an 11% expected annual rate of return. He has an investment of $41,000 in equities and bonds which yields 8% expected annual rate of return. If the graduate decides to purchase the car, the best estimate of the opportunity cost of that decision is ________.
A) $3,280
B) $14,740
C) $41,000
D) $18,040

Question

Quizplus · Accepted Answer

$33,500 × 11% × 4 years = $14,740 cost of the opportunity not chosen.

A Recent College Graduate Has the Choice of Buying a New