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      Question

      A firm uses a vacant plot to construct a new office. The plot could otherwise be leased at ₹10 lakhs annually. What is the opportunity cost of using the plot for construction?

      A Construction cost Correct Answer Incorrect Answer
      B Market value of land Correct Answer Incorrect Answer
      C Tax saving on depreciation Correct Answer Incorrect Answer
      D ₹10 lakhs per annum of foregone rental income Correct Answer Incorrect Answer

      Solution

      The correct answer is D

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