*** PLEASE SHOW & EXPLAIN ALL WORK *** Sam Smith is currently employed as a mech
ID: 2772745 • Letter: #
Question
*** PLEASE SHOW & EXPLAIN ALL WORK ***
Sam Smith is currently employed as a mechanical engineer and is paid $65,000 per year plus benefits that are equal to 30% his salary. Sam wants to begin a consulting firm and decides to leave his current job. After his first year in business, Sam's accountant informed him that he had made $45,000 with his consulting business. Sam also notices that he paid $6,000 for a health insurance policy, which was his total benefit during his first year. What was Sam's opportunity cost?
Explanation / Answer
Sam opportunity cost:
= $65,000+$65,000×30%
= $84,500
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