A Business Is Considering a Cash Outlay of $880,000 for the Purchase

question 36

Multiple Choice

A business is considering a cash outlay of $880,000 for the purchase of land, which it intends to lease for $200,000 per year.If alternative investments are available that yield a 15% return, the opportunity cost of the purchase of the land is:

• A) $132,000.
• B) $102,000.
• C) $200,000.
• D) $175,000.

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Definitions:

Writing Requirement

A legal principle that certain kinds of contracts or agreements must be recorded in written form to be legally binding and enforceable.

Confirming Memo

A written document used to reiterate agreements or transactions that have been verbally made, ensuring both parties share the same understanding.

Delivery Contract

A delivery contract is a legal agreement specifying the terms under which goods are to be transferred from a seller to a buyer.

Common Carrier

A business or agency that is available to the public for transportation of persons, goods, or services under a regulatory or legal obligation.