Question

Zach has decided to start his own photography studio. To purchase the necessary equipment, Zach withdrew $10,000 from his savings account, which was earning 3% interest, and borrowed an additional $5,000 from the bank at an interest rate of 8%. What is Zach's annual opportunity cost of the financial capital(implicit + explicit)that has been invested in the business?

Answer 1

Zach's annual opportunity cost of the financial capital(implicit + explicit)that has been invested in the business is $700.

Step-by-step explanation:

opportunity cost = 3%($10,000) +8%($5,000)

= $300 + $400

= $700

Therefore, Zach's annual opportunity cost of the financial capital(implicit + explicit)that has been invested in the business is $700.