Question

Gwen has decided to start her own photography studio. To purchase the necessary equipment, Gwen withdrew $2,000 from her savings account, which was earning 3% interest, and borrowed an additional $4,000 from the bank at an interest rate of 7%. What is Gwen's annual opportunity cost of the financial capital that has been invested in the business?

Answer 1

Gwen's annual opportunity cost of the financial capital that has been invested in the business is $60.

Step-by-step explanation:

Opportunity cost = 3%*$2,000

= $60

Therefore, Gwen's annual opportunity cost of the financial capital that has been invested in the business is $60.