If a Firm Buys a Delivery Van for $18,000 and Can

question 99

Multiple Choice

If a firm buys a delivery van for $18,000 and can resell it in 2 years for $7,500, the opportunity cost of using the van is

• A)$10,500.
• B)$7,500.
• C)$18,000.
• D)$3,750.

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Definitions:

Ordinary Repairs

Routine maintenance and repair costs that are expensed in the period incurred to keep an asset in its normal operating condition.

Physically Extracted

The process of removing materials or resources from the natural environment through manual or mechanical means.

Act Of Nature

Events caused by natural forces that are beyond human control, like earthquakes, hurricanes, or floods, affecting businesses and individuals.

Depreciation Expense

An accounting method that allocates the cost of a tangible asset over its useful life, reflecting wear and tear or obsolescence.