If You Make an Interest-Free Loan of $10,000 to a Friend

question 64

Multiple Choice

If you make an interest-free loan of $10,000 to a friend to help her get started in her new business and the interest rate charged by banks on similarly-risky loans is 15%,then the opportunity cost of the loan is equal to

• A) $10,000.
• B) $1,500.
• C) $11,500.
• D) $0.
• E) $8,500.

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