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Scenario 13-2 Chelsea wants to start her own Christmas ornament business. She can purchase a suitable factory that costs $100,000. Chelsea currently has $150,000 in the bank earning 3 percent interest per year. Refer to Scenario 13-2. Suppose Chelsea purchases the factory using $50,000 of her own money and $50,000 borrowed from a bank at an interest rate of 6 percent. What is Chelsea's annual opportunity cost of purchasing the factory

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Cricetus

Answer:

The correct solution is "$4500".

Explanation:

The given values are:

Factory costs,

= $100,000

Chelsea purchases the factory,

= $50,000

Chelsea borrowed,

= $50,000

According to the question,

Throughout the interest rate given up, the opportunity cost will be:

= [tex]3 \ percent\times 50000+6 \ percent\times 50000[/tex]

= [tex]1500+3000[/tex]

= [tex]4500[/tex] ($)

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