Question

Inayah needs Rs.100, 000 to start an ice-cream business. If she uses Rs.40, 000 from her savings and another Rs.60, 000 borrows from the bank. The interest rate is 5% in the market. Find the opportunity cost that Inayah has to bear in order to start a business​

Answer 1

Given:

Inayah needs Rs.100, 000 to start an ice-cream business.

To find:

The opportunity cost that Inayah has to bear in order to start a business​

Solution:

According to the condition of the question;

Inayah needs ₹1,00,000 to start the business in which she invested ₹40,000 from her saving and the remaining amount she takes the loan from the bank with the rate of the interest 5%.

so, the amount which she needs to repay to the bank to settle down her balance is given by:

100% = 60,000

the total amount after the interest will be 105%,

1% = 600

105% = 105×600

amount = 63,000

so the total cost bear by Inayah will be

₹40000+₹63000

₹1,03,000

The opportunity cost that Inayah has to bear in order to start a business​ is ₹1,03,000