Consider Larry's decision to go to college. If he goes to college, he will spend a total of $120,000 on tuition, $30,000 on room and board, and $3,500 on books over four years. If he does not go to college, he will earn $30,000 annually working in a store and spend $7,000 on room and board each year. Larry's cost of going to college is
A)$123,500.
B)$153,500.
C)$190,500
D)$245,500

Question

Quizplus · Accepted Answer

The cost of going to college includes tuition, room and board, books, and the opportunity cost of not working. Tuition is $120,000, room and board is $30,000, and books are $3,500. The opportunity cost is $30,000 per year for four years, totaling $120,000. Adding these gives $120,000 + $30,000 + $3,500 + $120,000 = $273,500. However, since he would spend $7,000 on room and board annually even if not attending college, we subtract $28,000 (4 years x $7,000) from the total, resulting in $245,500.

Consider Larry's Decision to Go to College