Question

Using your personal savings to invest in your business is considered to have an _____ _____ because you are giving up the use of these funds for other investments or uses, such as vacation or paying off a debt.

a) Opportunity cost
b) Asset enhancement
c) Strategic advantage
d) Equity infusion

Answer 1

Using personal savings to invest in a business has an opportunity cost as it means giving up the use of those funds for other investments or purposes.

Step-by-step explanation:

The answer to your question is a) Opportunity cost. Using your personal savings to invest in your business has an opportunity cost because you are giving up the use of these funds for other investments or uses.

Opportunity cost is the value of the next best alternative that you give up when making a decision. In this case, by investing your personal savings in your business, you are forgoing the opportunity to use those savings for other purposes, such as going on a vacation or paying off a debt.

For example, if you decide to invest $10,000 of your personal savings in your business, the opportunity cost would be the potential return or benefit from using that $10,000 for a different investment or purpose.