Elinore is asked to invest $5 000 in a friend's business with the promise that the friend will repay $5 500 in one year's time. Elinore finds her best alternative to this investment, with similar risk, is one that will pay her $5 400 in one year's time. Government securities of similar term offer a rate of return of 6%. What is the opportunity cost of capital in this case?

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The Answer of Elinore is asked to invest $5 000 in a friend's business with the promise that the friend will repay $5 500 in one year's time. Elinore finds her best alternative to this investment, with similar risk, is one that will pay her $5 400 in one year's time. Government securities of similar term offer a rate of return of 6%. What is the opportunity cost of capital in this case?

Elinore Is Asked to Invest $5 000 in a Friend's