Question

Greg, a landscaper, is planning on opening his own landscaping company. He currently earns $30,000 per year working for his uncle but he will need to quit that job. He hires one employee at an annual wage of $18,000. He needs to pay rent of $6,000 a year. He plans to use $12,000 in savings to pay for the equipment he needs, the market value of the equipment at the end of the year is $10,000. Also, he needs to buy $2,000 of goods and services from other firms. The current interest rate on savings is 6 percent. Greg predicts that the revenue from the new landscaping company is $55,000 a year. What is total opportunity cost incurred by Greg in running his own business

Answer 1

the total opportunity cost spent is $30,720

Step-by-step explanation:

The computation of the total opportunity cost spent is shown below:

= Earning per year + saving amount × current interest rate on savings

= $30,000 + $12,000 × 0.06

= $30,000 + $720

= $30,720

Hence, the total opportunity cost spent is $30,720

We simply applied the above formula so that the correct value could come

And, the same is to be considered