Jack Bowers has paid off the mortgage on his house and continues to live in the house.The interest income forgone by not selling the house and investing the proceeds is an example of an) _____.

Question

Quizplus · Accepted Answer

The interest income forgone by not selling the house and investing the proceeds is an example of an opportunity cost, which is the cost of forgoing the next best alternative. In this case, the opportunity cost is the potential interest income that could have been earned if the proceeds were invested elsewhere. Sunk costs are costs that have already been incurred and cannot be recovered, detrimental costs are not a recognized concept, and outlay costs are the direct costs of purchasing or acquiring something.

Jack Bowers Has Paid Off the Mortgage on His House