Question

After alistair earned his ba, he had to decide whether to accept the offer of a job that will pay him $45,000 per year or spend an additional two years earning an mba. if he decides to pursue the graduate degree, his annual expenses for tuition, books, board, and lodging will be $32,000. alistair has been offered a scholarship for $10,000 per year, but in order to pay the remaining $22,000 per year, he would have to cash in savings bonds that his grandparents have given him that have been earning $500 in interest per year. the annual opportunity cost of earning his mba is:

Answer 1

$77,500

Step-by-step explanation:

The computation of the annual opportunity cost of earning his mba is shown below:

= Cost of the job + cost of other expenses + the interest earned per year

= $45,000 + $22,000 + $500

= $77,500

In order to determine we added the cost of the job, cost of other expenses, and the interest earned per year so that the annual opportunity cost could arrive