Scenario 13-1 Korie Wants to Start Her Own Business Making Custom Furniture

question 630

Multiple Choice

Scenario 13-1
Korie wants to start her own business making custom furniture. She can purchase a factory that costs $400,000. Korie currently has $500,000 in the bank earning 3 percent interest per year.
-Refer to Scenario 13-1. Suppose Korie purchases the factory using $200,000 of her own money and $200,000 borrowed from a bank at an interest rate of 6 percent. What is Korie's annual opportunity cost of purchasing the factory?

• A)$3,000
• B)$6,000
• C)$15,000
• D)$18,000

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Definitions:

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