Priya Needs $50,000 to Start Up Her Own Business and Get

question 144

Multiple Choice

Priya needs $50,000 to start up her own business and get it off the ground. She can either withdraw the money from her savings account, where she currently earns 2 percent, or she can take out a loan for $50,000 and pay 2 percent interest. Priya should compare _____ and choose to _____.

• A)the implicit cost of $1,000 to the explicit cost of $51,000; use her savings
• B)the implicit cost of $51,000 to the explicit cost of $1,000; borrow the money
• C)the explicit cost of $1,000 to the implicit cost of $1,000; either use her savings or borrow the money, as each option costs the same
• D)the explicit cost of $1,000 to the implicit cost of $51,000; borrow the money

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