Share
Explore BrainMass

Opportunity Cost and Capital Balance

1. I bought my car for $28,000 five years ago, it is now worth $16,000 (net of selling expenses). I want to use my car in a new taxi business that I am starting. What is the correct opportunity cost that should be used in calculating the NPV of my taxi service?

2. If the working capital balance was $140,000 at the end of 2011 and was $100,000 at the end of 2012. What is the incremental investment in working capital for 2012?

Solution Preview

1. I bought my car for 28,000 five years ago, it is now worth 16,000 (net of selling expenses). I want to use my car in a new taxi business that I am starting. What is the correct opportunity cost that should be used in calculating the NPV of my taxi service?

Opportunity cost is ...

Solution Summary

Solution helps in estimating the incremental investment in working capital for 2012

$2.19