Farris Company Is Considering a Cash Outlay of $500,000 for the Purchase

Multiple Choice

Farris Company is considering a cash outlay of $500,000 for the purchase of land, which it could lease for $40,000 per year. If alternative investments are available that yield a 15% return, the opportunity cost of the purchase of the land is

A) $75,000
B) $40,000
C) $44,000
D) $7,500