You are thinking about delivering pizzas in your spare time. Since you must use

Question

You are thinking about delivering pizzas in your spare time. Since you must use your own car to deliver the pizzas, you will wear out your current car one year earlier, which is one year from today, than if you did not take on the delivery job. You estimate that when you purchase a new car, regardless of when that occurs, you will pay $23,000 for the car and it will last you five years. If your opportunity cost of capital is 6.7 percent, what is the opportunity cost of using your car to deliver pizzas? (Round answer to 2 decimal places, e.g. 15.25.)

Explanation / Answer

Opportunity Cost will be the interest earned on $23000, for buying it 1 year early
= 23000*6%
= $1380

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