A Recent College Graduate Has the Choice of Buying a New

question 47

Multiple Choice

A recent college graduate has the choice of buying a new car for $33,500 or investing the money for four years with an 11% expected annual rate of return. He has an investment of $41,000 in equities and bonds which yields 8% expected annual rate of return. If the graduate decides to purchase the car, the best estimate of the opportunity cost of that decision is ________.

• A) $3,280
• B) $14,740
• C) $41,000
• D) $18,040

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Definitions:

Oxygen

A chemical element with the symbol O, essential for respiration in most living organisms and used in various industrial processes.

Nitrogen

A diatomic gas that makes up about 78% of the Earth's atmosphere, essential for life as it is a major component of amino acids and nucleic acids.

Pressure

The force exerted per unit area upon a surface by the weight of the air above that surface in the atmosphere or by any gas in confined space.

Volume

A measurement of the amount of space an object or substance occupies.