1 answer

1. You’re working as an accountant at a CPA firm currently. You’re trying to figure out...

Question:

1. You’re working as an accountant at a CPA firm currently. You’re trying to figure out if you should start your own practice. Your current income is $75,000 a year. The cost of rent for an office space is $18,000 a year. Other overhead costs are about $15,000 a year. What is the opportunity cost of going to private practice?

a) $33,000

b) $75,000

c) $93,000

d) $90,000

2. When evaluating two mutually exclusive investments (you only have enough money for one, but not both), the best method to use is:

a) Payback Period

b) IRR

c) NPV

d) NPV and IRR are equally good.


Answers

Opportunity cost = Current Income

= $75000

i.e. b

2. d) NPV and IRR are equally good.

As both will result in same decision

.

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