Suppose You Have a Choice of Working Full-Time During the Summer

question 123

Multiple Choice

Suppose you have a choice of working full-time during the summer or going full-time to summer school.Summer tuition and books are $2,200.If you worked,you could make $7,000.Your rent is $1,000 for the summer,regardless of your choice.If these are the only relevant costs to consider,the opportunity cost of going to summer school is:​

• A)$2,200.
• B)$7,000.
• C)$8,000.
• D)$9,200.
• E)$10,200.

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Definitions:

Effective Annual Rate

The interest rate that reflects the compound interest rate paid or earned on an investment, loan, or other financial product over a year.

Compounding Periods

The frequency with which interest is added to the principal balance of an investment, affecting its overall future value.

Time Value

The principle that money in hand today has a greater value than an identical sum received in the future because of its ability to earn more over time.

Investment

The process of distributing funds with the aim of earning an income or a profit.