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Exercise 6-5A (Algo) Opportunity costs LO 6-1 Norman Dowd owns his own taxi, for which he bought a $11,800 permit to operate two years ago. Mr. Dowd earns $35,400 a year operating as an independent but has the opportunity to sell the taxi and permit for $45,500 and take a position as dispatcher for Carter Taxi Company The dispatcher position pays $36,500 a year for a 40-hour week. Driving his own taxi, Mr. Dowd works approximately 55 hours per week. If he sells his business, he will invest the $45,500 and can earn a 10 percent return Required a. Determine the opportunity cost of owning and operating the independent business b. Calculate the earnings of Norman Dowd operating as an independent and the earnings of Norman Dowd working as a dispatcher Based solely on financial considerations, should Mr. Dowd sell the taxi and accept the position as dispatcher? Answer is complete but not entirely correct. $ 4,550 $ 644 $ 702 a Opportunity cost b. Operating as an independent Working as a despatcher Should Mr Dowd sell the tax and accept the position as dispatcher? Yes

Exercise 6-5A (Algo) Opportunity costs LO 6-1 Norman Dowd owns his own taxi, for which he bought a $11,800 permit to operate two years ago. Mr. Dowd earns $35,400 a year operating as an independent but has the opportunity to sell the taxi and permit for $45,500 and take a position as dispatcher for Carter Taxi Company The dispatcher position pays $36,500 a year for a 40-hour week. Driving his own taxi, Mr. Dowd works approximately 55 hours per week. If he sells his business, he will invest the $45,500 and can earn a 10 percent return Required a. Determine the opportunity cost of owning and operating the independent business b. Calculate the earnings of Norman Dowd operating as an independent and the earnings of Norman Dowd working as a dispatcher Based solely on financial considerations, should Mr. Dowd sell the taxi and accept the position as dispatcher? Answer is complete but not entirely correct. $ 4,550 $ 644 $ 702 a Opportunity cost b. Operating as an independent Working as a despatcher Should Mr Dowd sell the tax and accept the position as dispatcher? Yes

SWFT Individual Income Taxes
SWFT Individual Income Taxes
43rd Edition
ISBN:9780357391365
Author:YOUNG
Publisher:YOUNG
Chapter9: Deductions: Employee And Self-employed-related Expenses
Section: Chapter Questions
Problem 35P
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Exercise 6-5A (Algo) Opportunity costs LO 6-1 Norman Dowd owns his own taxi, for which he bought a $11,800 permit to operate two years ago. Mr. Dowd earns $35,400 a year operating as an independent but has the opportunity to sell the taxi and permit for $45,500 and take a position as dispatcher for Carter Taxi Company The dispatcher position pays $36,500 a year for a 40-hour week. Driving his own taxi, Mr. Dowd works approximately 55 hours per week. If he sells his business, he will invest the $45,500 and can earn a 10 percent return Required a. Determine the opportunity cost of owning and operating the independent business b. Calculate the earnings of Norman Dowd operating as an independent and the earnings of Norman Dowd working as a dispatcher Based solely on financial considerations, should Mr. Dowd sell the taxi and accept the position as dispatcher? Answer is complete but not entirely correct. $ 4,550 $ 644 S 702 a Opportunity cost b. Operating as an independent Working as a dispatcher Should Mr. Dowd sell the tax and accept the position as dispatcher? Yes
Transcribed Image Text:Exercise 6-5A (Algo) Opportunity costs LO 6-1 Norman Dowd owns his own taxi, for which he bought a $11,800 permit to operate two years ago. Mr. Dowd earns $35,400 a year operating as an independent but has the opportunity to sell the taxi and permit for $45,500 and take a position as dispatcher for Carter Taxi Company The dispatcher position pays $36,500 a year for a 40-hour week. Driving his own taxi, Mr. Dowd works approximately 55 hours per week. If he sells his business, he will invest the $45,500 and can earn a 10 percent return Required a. Determine the opportunity cost of owning and operating the independent business b. Calculate the earnings of Norman Dowd operating as an independent and the earnings of Norman Dowd working as a dispatcher Based solely on financial considerations, should Mr. Dowd sell the taxi and accept the position as dispatcher? Answer is complete but not entirely correct. $ 4,550 $ 644 S 702 a Opportunity cost b. Operating as an independent Working as a dispatcher Should Mr. Dowd sell the tax and accept the position as dispatcher? Yes
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