A Business Is Considering a Cash Outlay of $200,000 for the Purchase

question 55

Multiple Choice

A business is considering a cash outlay of $200,000 for the purchase of land, which it could lease for $35,000 per year.If alternative investments are available that yield an 18% return, the opportunity cost of the purchase of the land is:

• A) $35,000.
• B) $36,000.
• C) $1,000.
• D) $37,000.

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Definitions:

Time Utilities

The value added to products or services by making them available at the most beneficial time.

Airfreight

The transportation of goods by aircraft, typically used for time-sensitive or high-value shipments.

Supply Chain Strategy

An approach for managing the flow of goods and services, involving the movement and storage of raw materials, of work-in-process inventory, and of finished goods from point of origin to point of consumption.

Inventory Low

A situation in which stock levels of products are critically reduced, posing a risk of stockouts and potential lost sales.