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19 December, 23:18

The maintenance expenses on a rental house you own average $200 a month and property taxes are $4,800 annually. The house cost $238,500 when you purchased it four years ago. The house was recently appraised at $247,600. If you sell the house you will incur $12,900 in costs. What value should you place on this house should you opt to use it as your professional office?

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  1. 20 December, 01:05
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    The correct answer is $234,700.

    Explanation:

    According to the scenario, the given data are as follows:

    Appraised value = $247,600

    Cost incurs in house = $12,900

    Purchased cost = $238,500

    So, we can calculate the opportunity cost by using following formula:

    Opportunity Cost = Appraised Value of the house - Cost incur

    By putting the value, we get

    = $247,600 - $12,900

    = $234,700
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