Suppose you have a dinner gift certificate for $20. You can use it to order meatloaf or pot roast. Meatloaf costs $12 and pot roast costs $14. Meatloaf and pot roast are both worth $15 to you. The dollar value of the opportunity cost of choosing meatloaf instead of pot roast is $15 EX.
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What Is Opportunity Cost?</h3>
Opportunity costs represent the potential benefits that an individual, investor, or business misses out on when choosing one alternative over another. Because opportunity costs are unseen by definition, they can be easily overlooked. Understanding the potential missed opportunities when a business or individual chooses one investment over another allows for better decision making.
Opportunity cost is often overlooked by investors. In essence, it refers to the hidden cost associated with not taking an alternative course of action. If, for example, a company pursues a particular business strategy without first considering the merits of alternative strategies available to them, they might fail to appreciate their opportunity costs and the possibility that they could have done even better had they chosen another path.
Formula Of Opportunity Cost
Opportunity Cost=FO−CO
where:
FO=Return on best forgone option.
CO=Return on chosen option.
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In a closed-fact problem, the main goal of tax research is to: find support for an action the taxpayer has already taken.
Explanation:
When filing a tax return, many people are medically supported. Strong tax research skills are even greater because of their complexity and application in tax law. The purpose of this chapter is to provide information and advice on tax compliance analysis as well as tax planning. In addition, the technique of tax analysis is quite similar to accounting and auditing.
The aim of tax research is to increase the profit or gains of the taxpayer. The aim is not to generate the minimum tax liability potential. Customers should determine the accuracy of tax returns or try to minimize possible IRS conflicts.
This difference of perspective — to optimize after-tax gains instead of reducing taxation — is particularly important when one considers that many tax planning techniques require such pre-tax income transfers, either in the form of additional expenditures, income avoidance or both.
14 Years.
The rule of 70 is a measure of how long it takes for something to double. 70 is divided by the rate of growth or rate of return.
70/5% = 14 years
Answer:
$28,533.5
Explanation:
Principal value (PV) = $275,000
Time = 20 years
Rate = 8.25%
Present Value = P ((1-(1+R)^-n) / r)
275,000 = P ((1- (1 + 0.0825)^-20) /.0825)
275,000 x .0825 = P (1-(1/1.0825)^20)
22687.5 = P ((1.0825^20 - 1) / (1.0825 ^20))
22687.50 = P (4.8816 - 1 / 4.8816)
22687.5 = P (3.886 / 4.8816)
22687.5 = p(0.7951)
P = 22687.5 / 0.7951
P = $28533.5
