Respuesta :
If the firm uses the building for a project, then its opportunity cost, ignoring taxes, is $1,00,000.
What do you mean by opportunity cost?
The opportunity cost of a given activity option is the value or benefit that would be lost if that activity were chosen rather than another activity that delivers a higher return on value or benefit. The comparative advantage increases as the opportunity cost decrease. In simple terms, choosing one option over another results in a loss of profit.
In this instance, the building's market worth is $250,000. The business has the chance to make $250,000 by selling the building. Instead, the company has used the structure for its operations, leaving at the earliest chance. Therefore, the building's opportunity cost will be $1,00,000.
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