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 1 percent, and the rate of interest he could earn by investing in bonds is 3 percent. What is the opportunity cost of capital when the mechanic uses his money to start his own business?
A) $1,500 per year
B) $3,000 per year
C) $4,500 per year
D) $6,000 per year
E) $150,000

Question

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The Answer of 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 1 percent, and the rate of interest he could earn by investing in bonds is 3 percent. What is the opportunity cost of capital when the mechanic uses his money to start his own business?
A) $1,500 per year
B) $3,000 per year
C) $4,500 per year
D) $6,000 per year
E) $150,000

Suppose a Mechanic Uses $150,000 of His Own Money to Start