Question
Sue purchased a house for $89,000, spent $56,000 upgrading it, and currently had it appraised at $212,900. The house is being rented to a family
Sue purchased a house for $89,000, spent $56,000 upgrading it,
and currently had it appraised at $212,900. The house is being
rented to a family for $1,200 a month, the maintenance expenses
average $200 a month, and the property taxes are $4,800 a year. If
she sells the house she will incur $20,000 in expenses. She is
considering converting the house into professional office space.
What opportunity cost, if any, should she assign to this property
if she has been renting it for the past two years? Select one: a.
$185,000 b. $192,900 c. $178,500 d. $120,000 e. $232,900
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