Ask Question
7 May, 15:05

Mike wants to open his own repair shop, and is considering using his savings of $30,000 to get it started. He is currently earning 3 percent interest on his savings. His friend Bob calls him and asks to borrow $30,000 to start up a bagel shop; Bob offers to pay him 5 percent interest if he loans him the money. If Mike were to use the money to open his own repair shop, how can he accurately account for his costs?

+3
Answers (1)
  1. 7 May, 15:13
    0
    Mike must not only consider his accounting costs, but also his implicit costs. Mike's implicit costs (or opportunity costs) should include the $1,500 in interest that he could earn by ending the money to his friend Bob and the amount of money he could earn by working somewhere else.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Mike wants to open his own repair shop, and is considering using his savings of $30,000 to get it started. He is currently earning 3 ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers