You Have Driven 850 Miles on a Vacation and Then

question 49

Multiple Choice

You have driven 850 miles on a vacation and then you notice that you are only 50 miles from an attraction you hadn't known about, but would really like to see. In computing the opportunity cost of visiting this attraction you had not planned to visit, you should include

• A)both the cost of driving the first 850 miles and the next 50 miles.
• B)the cost of driving the first 850 miles, but not the cost of driving the next 50 miles.
• C)the cost of driving the next 50 miles, but not the cost of driving the first 850 miles.
• D)neither the cost of driving the first 850 miles nor the cost of driving the next 50 miles.

---

Definitions:

Salvage Value

Projected value of an asset for resale once it has concluded its period of effective use.

Installation Costs

Installation costs are expenses associated with setting up or installing equipment, machinery, or other assets so they are ready for use.

Straight-Line Depreciation

A method of allocating the cost of a tangible asset over its useful life in equal annual amounts.

Payback Period

Payback Period is the length of time it takes for an investment to generate sufficient cash flow to recover its initial cost, used as a basic measure of investment risk.