Helen Gives Up the Opportunity to Bake 40 Cakes for Each

question 30

Multiple Choice

Helen gives up the opportunity to bake 40 cakes for each room she paints; Josh can paint one room in the time it takes him to bake 60 cakes.The opportunity cost of a cake for Helen is

• A)painting one room
• B)painting 1/40 of a room
• C)painting 1/60 of a room
• D)painting 2/3 of a room
• E)painting 3/2 of a room

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Definitions:

Present Value

The current value of a future amount of money or stream of cash flows given a specified rate of return.

Future Value

The amount of money an investment is expected to be worth in the future, considering interest or capital gains.

Interest Rate

The amount charged by a lender to a borrower for the use of assets, expressed as a percentage of the principal.

Interest

A charge for borrowed money, generally a percentage of the amount borrowed, paid by the borrower to the lender over a set period.