the correct answer is?
Frederick wants to redo his kitchen but also wants to save money for retirement. His retirement account is expected to earn 5% interest every year and redoing his kitchen would cost $15,000
. What is the opportunity cost for choosing to save the money for retirement?
5% of the initial $15,000
in the first year, plus 5% of the new total in that account in the second year, plus 5% more in the third year, and so on until he withdraws the money
the benefit he would get from redoing his kitchen
$15,000
5%
of $15,000 = $750
So, the opportunity cost of choosing to save the money for retirement instead of redoing his kitchen is $750.