Seven years ago, you paid $324,800 to purchase a rental house. the maintenance expenses average $200 a month and property taxes

Question

2 years ago

9

Seven years ago, you paid $324,800 to purchase a rental house. the maintenance expenses average $200 a month and property taxes

are $4,800 annually. the house was recently appraised at $439,500. if you sell the house you will incur $14,200 in selling costs. if you decide to use the house as your office, what value should you assign it

Business

1 answer:

Mariulka [41] · Answer 1 · 2023-06-01T03:54:04+03:00

The value that would be assigned to this house if you decide to use it as your office would be $ 425300

<h3>How to solve for the value of the house using opportunity cost</h3>

To get the value of the house, you have to get the opportunity cost of the house. This is the foregone alternative or benefits forgone due to another choice.

The formula is opportunity cost = Apprised Value - Selling costs

The apprised value = $439,500.

selling cost = $14,200

$439,500 - $14,200

= $ 425300

Hence the value that should be assigned to it is $ 425300