Briefly answer the following questions:
a. Sarah earns $40,000 per year working for a large corporation. She is thinking of quitting this job to work full time in her own business. She will invest her savings of $100,000 (which currently has an annual 10% rate of return) into the business. What is her annual opportunity cost of this new business? Why?
b. Four years after graduating from college you must decide if you want to go on as an accountant (your college major) or if you want to make a career change and become a singer. Should the cost of your education matter for your decision after you have graduated from the college?