Suppose that you have received $300 as a birthday gift. You can spend it today or you can put themoney in a bankaccount for a year and earn 5 percent interest. The opportunity cost of spending themoney today, in terms of whatyou could have after one year, isa. $0. b. $15. c. $305. d. $315

Question

Leonidas Brady

Business

5 May, 03:05

Suppose that you have received $300 as a birthday gift. You can spend it today or you can put themoney in a bankaccount for a year and earn 5 percent interest. The opportunity cost of spending themoney today, in terms of whatyou could have after one year, isa. $0. b. $15. c. $305. d. $315

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Leanna · Answer 1

d. $315

Explanation:

The computation of the opportunity cost after one year is shown below:

= Received amount as a birthday gift + Received amount as a birthday gift * rate of interest

= $300 + $300 * 5%

= $300 + $15

= $315

We simply considering the received amount and the rate of interest which is increased to find the opportunity cost after one year