Scenario 14-4 Victor Is the Recipient of $1 Million from a Lawsuit

question 137

Multiple Choice

Scenario 14-4
Victor is the recipient of $1 million from a lawsuit. Victor decides to use the money to purchase a small business in Florida. His business operates in a perfectly competitive industry. If Victor would have invested the $1 million in a risk-free bond fund, he could have earned $100,000 each year. After he bought the small business, Victor quit his job as a market analyst with Research, Inc., where he used to earn $75,000 per year.
-Refer to Scenario 14-4. What is Victor's opportunity costs of operating his new business?

• A)$25,000
• B)$75,000
• C)$100,000
• D)$175,000

---

Definitions:

Office Supplies

Consumable items that are used in offices on a day-to-day basis for administrative and office-related tasks, such as paper, pens, and staples.

Petty Cash Fund

A small amount of cash kept on hand for minor, immediate expenses to avoid the complexities of writing checks.

Missing Funds

Refers to a situation where there is a discrepancy between expected and actual funds, indicating that money might be unaccounted for or lost.

Office Supplies

Items used in offices for daily operations, such as paper, pens, and other stationery items, usually considered short-term assets.