Oprah just inherited a house with a market value of $100 comma 000 , and she does not expect the market value to change. Each year, she will pay $750 for utilities and $5 comma 000 in taxes. She can earn 4 percent interest on money in a bank account. Her cost of living in the house for the year is $

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Business

Chicken Wing

19 July, 23:41

Oprah just inherited a house with a market value of $100 comma 000 , and she does not expect the market value to change. Each year, she will pay $750 for utilities and $5 comma 000 in taxes. She can earn 4 percent interest on money in a bank account. Her cost of living in the house for the year is $

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Brendan Green · Answer 1

9,750 Cost of living per year

Explanation:

100,000

750 utilities

5,000 taxes

100,000 x 0.04 = 4,000 Opportunity cost

9,750 Cost of living per year

We have to include the interest yiled, becuse if she decides to leave, it will sale and receive that cash on interest.

This is an opportunity cost.