David Has the Following Information to Evaluate His Current Salary

question 17

Multiple Choice

David has the following information to evaluate his current salary of $62,000 versus total revenues of $110,000 and expenses of $67,000 from starting a new business. How much is the opportunity cost associated with staying at his current job?

• A) $5,000
• B) $43,000
• C) $62,000
• D) $110,000

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Definitions:

Interest Allowance

A provision or adjustment made for the calculation of interest receivable or payable over a specified period.

Fixed Ratio

A prescribed relationship between two quantities, expressed as a constant value.

Net Income

The total earnings of a company after deducting all costs and expenses from revenue, indicating the company's profitability.

Liquidation

The process of closing a business by selling its assets to pay off its liabilities, with any remaining proceeds distributed to shareholders or owners.