When the owner of a business invests his or her own money in the business, they give up the interest this money could be earning in the bank. This forgone interest is called

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The forgone interest that the owner of a business gives up by investing their own money is called the opportunity cost of equity capital. This is because the owner could have earned interest on that money if it was kept in a bank account or invested elsewhere, but instead chose to invest it in their own business. This cost should be considered when evaluating the overall profitability of the business.

When the Owner of a Business Invests His or Her