Josh has decided to take a course at the local community college that could help him get a promotion at work.The course begins at 5 p.m.and goes until 9 p.m.on Monday nights.Josh normally works until 5 p.m.each day,but because of the drive time to the community college,he will need to leave work at 3 p.m.on class days.Josh currently earns $18.50 per hour.His employer contributes 10% of Josh's gross earnings to a 401(k)retirement plan.If the class meets 16 times,what is Josh's total opportunity cost for the class?
A) $592.00
B) $800.00
C) $651.20
D) None

Question

Quizplus · Accepted Answer

To calculate Josh's opportunity cost, we need to consider both the lost income from leaving work early and the lost contribution to his 401(k) plan.

Lost income:
Josh normally works 8 hours each day, so leaving 2 hours early means he is losing 2/8 or 1/4 of his daily income. That's $18.50 x 1/4 = $4.63 per hour. Over 16 class meetings, that's a total of $4.63 x 16 = $74.08 in lost income.

Lost contribution to 401(k):
Josh's employer contributes 10% of his gross earnings to his 401(k) plan. Leaving work 2 hours early means he is losing 2/8 or 1/4 of his daily gross earnings. That's $18.50 x 1/4 = $4.63 per hour. Over 16 class meetings, that's a total of $4.63 x 16 = $74.08 in lost 401(k) contributions.

Total opportunity cost:
Lost income + lost contribution to 401(k) = $74.08 + $74.08 = $148.16

Therefore, the correct answer is C) $651.20

Josh Has Decided to Take a Course at the Local