Scenario 9.1 Jane Left Her Job at Siemens and Started Her Own

question 26

Multiple Choice

Scenario 9.1
Jane left her job at Siemens and started her own boutique. She used to earn $50,000 annually at Siemens. She took a loan of $10,000 and used $20,000 from her personal savings to begin her venture. She agreed to repay the loan with 10% interest. Her business is bringing in $80,000 annually. She has rent and labor expenses of $15,000. Also assume that Jane could have used her own money i.e. $20,000 to buy stocks in Intel which would have returned 5% to her last year.
-Suppose a mechanic uses $150,000 of his own money to start a business. The rate of interest he could earn in a savings account is 5 percent, and the rate of interest he could earn by investing in bonds is 8 percent. What is the opportunity cost of capital when the mechanic uses his money to start his own business?

• A)$7,500/year
• B)$8,000/year
• C)$19,500/year
• D)$12,000/year
• E)$150,000/year

---

Definitions:

Desirability

The quality of being wanted or wished for as attractive, useful, or necessary.

Organizational Targets

Specific objectives set by an organization aiming to achieve its strategic goals and mission.

Technology

The combination of knowledge, skills, equipment, and work methods used to transform inputs into outputs.

Structure

The organizational framework or arrangement of various parts of a system, project, or organization.