Answer: $75,000
Explanation:
Opportunity cost is what an individual, firm or the government has to forgo when another different choice is made.
From the question, we are informed that Farris Company is considering a cash outlay of $500,000 for the purchase of land, which it could lease for $40,000 per year and that alternative investments are available that yield a 15% return.
Then the opportunity cost of the purchase of the land will be:
= $500,000 × 15%
= $500,000 × 0.15
= $75,000
