If the $20,000 spent to purchase inventory could be invested and earn interest of $500, then the opportunity cost of holding inventory is $20,000.

Name: If the $20,000 spent to purchase inventory could be invested and earn interest of $500, then the opportunity cost of holding inventory is $20,000.
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Question

Quizplus · Accepted Answer

The opportunity cost of holding inventory is the $500 interest that could have been earned, not the $20,000 spent on purchasing the inventory.

If the $20,000 Spent to Purchase Inventory Could Be Invested