Answer:
$12,146
Explanation:
The computation of present value of this opportunity cost is shown below:-
Net After tax Operating Profit Per month = Rent space per month Ă— Profit margin on the renting the space percentage
= $1,000 Ă— 30%
= $300
Project is for 4 Years
Total months = 4 Ă— 12
= 48 Months
Interest Rate Per month = 9% Ă· 12
= 0.75%
As per the question the Rent is Received at the start of the month
So Present Value of this opportunity cost = $300 (1 + PVAF (0.75%,47))
= $300 Ă— ( 1 + 39.486)
= $12,145.85
= $12,146