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

question 93

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 total opportunity cost of capital is

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

---

Definitions:

Smoking

The inhalation of the smoke from burning tobacco encased in cigarettes, pipes, and cigars, which has health implications.

Educational IRA

A savings plan for education expenses that allows money to grow tax-free until funds are withdrawn to pay for qualified education costs.

Investments

Assets that are purchased with the expectation that they will generate income or appreciate in value over time.

8%

A percentage, often representing an interest rate, return on investment, or growth rate.