Asked by Mitchell Allen on Jun 11, 2024
Verified
When you use your own savings to start a business, you make a profit
A) after the first dollar you earn, because you borrowed no funds to start the business.
B) after you earn an amount equal to the savings you used to start the business.
C) only after you cover the opportunity cost of using your savings to start your business.
D) only after you earn double the amount of money you invested.
Opportunity Cost
The skipping of feasible improvements from various alternatives due to settling on one.
Own Savings
The portion of personal or household income that is not spent on consumption but is kept aside for future use, investments, or emergencies.
- Determine the financial profit or loss through analysis of returns on investment and interest rates.
Verified Answer
SR
Steven ReinigJun 18, 2024
Final Answer :
C
Explanation :
Profit is realized after covering all costs, including the opportunity cost of using your own savings instead of investing them elsewhere. This accounts for the potential earnings you forego by choosing to invest in your business.
Learning Objectives
- Determine the financial profit or loss through analysis of returns on investment and interest rates.