You are currently employed at a major investment bank and are making £50,000/year (and expect to make that amount each year for the next five years). A friend comes to you with an idea for a project to make soundproof glass shields for cars to protect people from noise. You will have to quit your job, and the project will require an initial investment in equipment of £350,000 (which can be depreciated straight line over five years to a salvage value of £100,000). Your personal income tax rate is 40% and the discount rate is 10%. What is the opportunity cost of having to quit your job to take this project?

Answer rating: 100% (QA)

The opportunity cost of quitting your job to take the project is the value of the income you would h... View the full answer