Oliver Scott has just made the final payment on
his mortgage. He could continue to live in the home; cash expenses for repairs ©
and maintenance (after any tax effects) would be $500 monthly. Alternatively,
he could sell the home for $200,000, invest the proceeds in 8 percent bonds, and
rent an apartment for $18,000 annually. The landlord would then pay for repairs
and maintenance.
Prepare two analyses of alternatives, one showing no explicit opportunity
cost and the second showing the explicit opportunity cost of the decision to hold
the present home.