Scenario 13-5 Suppose That Emily Opens a Restaurant. She Receives a Loan

question 403

Multiple Choice

Scenario 13-5
Suppose that Emily opens a restaurant. She receives a loan from a bank for $200,000. She withdraws $100,000 from her personal savings account. The interest rate on the loan is 6%, and the interest rate on her savings account is 2%.
-Refer to Scenario 13-5. Emily's explicit cost of capital is

• A) $2,000.
• B) $4,000.
• C) $12,000.
• D) $14,000.

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