The divergence between money costs and opportunity costs will be greatest in which of the following situations?
A. A university purchases 100 computers.
B. A university employs people from town in the cafeteria (the other alternative is to work at a paper mill).
C. A university employs otherwise unemployed teenagers to paint crosswalks and curbs.
D. A university replaces the roof of the fine arts building.
Answer: C
You might also like to view...
If you take out a mortgage with a nominal interest rate of 8% and you expect the inflation rate to be 2%, then you expect to pay a real interest rate of
A) 4%. B) 6%. C) 10%. D) 16%.
Ed's Electronic Devices has an asset beta of 1.2. The market rate of return is 12% and the risk-free rate of return is 2%. Ed is considering updating his production technology
If he does so, he expects the cash streams indicated in the table below. Given this information, should Ed update his production technology? Year Cashflow Present Value 0 -$100,000 1 $25,000 2 $25,000 3 $25,000 4 $25,000 5 $25,000 6 $25,000 Total