Lara Technologies Is Considering a Total Cash Outlay of $250,000

question 11

Multiple Choice

Lara Technologies is considering a total cash outlay of $250,000 for the purchase of land, which it could lease out for $35,000 per year. If alternative investments are available that yield a 12% return, the opportunity cost of the purchase of the land is

• A) $35,000
• B) $30,000
• C) $250,000
• D) $4,200

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Definitions:

General Ledger

A complete record of all the financial transactions over the lifetime of a company, serving as the primary source of accounting data.

Investing Activities

Deals related to buying and selling long-term assets and investments that are not considered as cash equivalents.

Loss

A financial condition where expenses exceed revenues, resulting in a negative net income for a business.

Sale of Equipment

The process of disposing of business equipment, which is recorded as a financial transaction affecting company assets.