Scenario 13-4
Suppose that Abdul opens a coffee shop. He receives a loan from a bank for $100,000. He withdraws $50,000 from his personal savings account. The interest rate on the loan is 8%, and the interest rate on his savings account is 2%.
-Refer to Scenario 13-4. Abdul's explicit cost of capital is
A) $8,000.
B) $4,000.
C) $2,000.
D) $1,000.

Question

Quizplus · Accepted Answer

The explicit cost of capital is the interest paid on the loan, which is $100,000 at 8%, resulting in $8,000.

Scenario 13-4 Suppose That Abdul Opens a Coffee Shop. He Receives a Receives