6955388 - consideration the opportunity costs associated...

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c. Given: Burton’s revenues per month = $25,000 And operating costs = $18,000 Therefore net cash flow = $(25,000 – 18,000) = $7,000 These same resources when put in their next best use, will enable Burton to earn: $(15,000 + 5,000) = $20,000 which is nothing but the opportunity costs of both the resources put together. My advice to Burton Cummings would be to not be very proud of what he is currently doing and look into the alternative uses of the resources he is currently using. After taking into
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Unformatted text preview: consideration the opportunity costs associated with the resources that Burton is using, his net cash flow would be: $(7,000 – 20,000) = -$13,000 which is negative. It therefore makes more sense for Burton to rent out the tractor-trailer rig and drive his competitor’s trucks rather than driving and maintaining his own....
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