Suppose a Mechanic Uses $150,000 of His Own Money to Start

question 56

Multiple Choice

Suppose a mechanic uses $150,000 of his own money to start a business. The rate of interest he could earn in a savings account is 5 percent, and the rate of interest he could earn by investing in bonds is 8 percent. What is the opportunity cost of capital when the mechanic uses his money to start his own business?

• A)$8,000/year
• B)$7,500/year
• C)$150,000
• D)$12,000/year
• E)$19,500/year

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Definitions:

Isotonic Solutions

Solutions that have the same osmotic pressure as some other solution, typically body fluids, allowing for the exchange of water without causing cell shrinkage or swelling.

DA Equations

Refers to Dimensional Analysis Equations, a mathematical method used to convert units by multiplying by appropriate conversion factors.

Gravity Device

A device used in medical settings for the administration of fluids or medications that relies on gravity to control the flow rate.

Microdrip Administration Set

A device used in intravenous therapy that delivers a precise, small volume of fluid per drop, commonly used for accurate dosing.