Question
Two years ago, Corey Jemison bought a truck for $35,000 to offer delivery services. Corey earns $40,000 a year operating as an independent trucker. He
Two years ago, Corey Jemison bought a truck for $35,000 to offer delivery services. Corey earns $40,000 a year operating as an independent trucker. He has an opportunity to sell his truck for $18,750 and take a position as an instructor in a truck driving school. The instructor position pays $31,250 a year for working 40 hours per week. Driving his truck, Corey works approximately 60 hours per week. If Corey sells his truck, he will invest the proceeds of the sale in bonds that pay a 12 percent return.
a. Determine the opportunity cost of owning and operating the independent delivery business.
b. Based solely on financial considerations, should Corey sell his truck and accept the instructor position?
c. Discuss the qualitative as well as quantitative characteristics that Corey should consider.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started