Question

Ohn invested $12,000 in the stock of Hyper Cyber Eight years later, Hyper Cyber's shares reached $125,000, but John held onto the shares in the belief that their price would double in the next five years. Unfortunately, Hyper Cyber did not double. Rather the market value of John's shares today is $4,000. If the shares were sold and the proceeds invested in another investment, they would likely earn 5% per annum. Which of the following terms and values is correct?

$125,000 is the opportunity cost of selling the shares today

$12,000 is a sunk cost

$250,000 is the opportunity cost

$2000 is the opportunity cost

None of the above

Answer 1

it's 12,000

Step-by-step explanation:

Answer 2

$12,000 is a sunk cost

Step-by-step explanation:

The opportunity cost is the csot of the best rejected option. by investing in this new project Jhon is not resinging to any of there proposed amount as they are uncertain. Jhon cannot obtain from the Hyper Cyber stock those amount.

The 12,000 is a sunk cost as they are already incurred. Jhon should decide which is the best investment for the 4,000 dollars currently has. Consider investment with a value of 12,000 or 125,000 is not a realistic nor useful approach.