Since Edward has no explicit variable costs, the economic costs associated with him mowing lawns for a year include:

• (1) the opportunity cost of not being a pedicurist for the year and
• (2) the interest foregone on the $20,000 tied up in the truck and mower, which costs 10% of that amount per year.

Therefore: the annual economic cost is calculated as follows:

• Annual economic cost = (Number of lawns * Hours to cut a lawn * hourly pedicurist rate foregone) + (Equipment value * interest rate)
• = (100 * 2 * $12) + ($20,000 * 0.10)
• = $2,400 + $2,000
• = $4,400.