Recall the Application About Rory McIlroy and Weed-Whacking to Answer

question 74

Multiple Choice

Recall the Application about Rory McIlroy and weed-whacking to answer the following question(s) . The Application assumes that Rory McIlroy could whack down all the weeds on his estate in one hour at an opportunity cost of $1,000, but it would take 20 hours for a gardener to do it at a price of $10 per hour.
-Based on the assumptions in the Application, should Rory hire a gardener or cut the weeds himself?

• A) He should hire the gardener because he would save $1,000.
• B) He should hire the gardener because he would save $800.
• C) He should cut the weeds himself because he would save $200.
• D) He should cut the weeds himself because he would save $1,000.

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Definitions:

Compound Interest

Interest calculated on the initial principal of a deposit or loan, which also includes all of the accumulated interest from previous periods on a deposit or loan.

Net Present Value

A financial metric that calculates the present value of all future cash flows produced by an investment, minus the initial investment cost, to evaluate its profitability.

Earnings Rate

The rate of return on an investment or project, often expressed as a percentage of the investment's cost.

Compound Interest

This refers to the calculation of interest on the beginning balance of a loan or deposit, adding in the interest that has built up over time from prior periods.