Scott used $4,000,000 from his savings account that paid an annual interest of 5% to purchase a hardware store.After one year,Scott sold the business for $4,100,000.An Economist calculated his profit to be:

Question

Quizplus · Accepted Answer

Scott's opportunity cost of using his savings was the 5% interest he would have earned, which is $200,000. Selling the business for $4,100,000 means he effectively made $100,000 more than his initial investment, but he lost the $200,000 interest, resulting in a net loss of $100,000.

Scott Used $4,000,000 from His Savings Account That Paid an Annual