Identifying options, calculating value and opportunity cost (LO1). Nick is a computer technician who works from his own home and charges $75 per hour. He works 25 days a month for an average of 6...

Identifying options, calculating value and opportunity cost (LO1). Nick is a computer technician who works from his own home and charges $75 per hour. He works 25 days a month for an average of 6 hours a day. Recently, a computer company offered Nick a job with a monthly salary $7,500. If Nick accepts the job, he could still work for two hours every evening (for 25 days per month) repairing computers; however, Nick will reduce his fee from $75 per hour to $50 per hour if he accepts the job. Of course, Nick can continue doing what he does and reject the offer.

Required:

a. Identify the three options that Nick faces.

b. Calculate the income from each option.

c. Treating the income from each option as the value of that option, determine the opportunity cost of each option.

d. Which option should Nick choose? How does the value of this option compare with its opportunity cost?