Barb’s aunt gave her $100 for her birthday with the condition that barb buy herself something. in deciding how to spend the money, barb narrows her options down to four choices: option a, option b, option c, and option d. each option costs $100. finally she decides on option b. the opportunity cost of this decision is
a. the value to barb of options a, c and d combined.
b. $100.
c. the average of the values to barb of options a, c, and d.
d. the value to barb of the option she would have chosen had option b not been available.

The correct answer is option d.

Explanation:

Barb’s aunt gave her $100 for her birthday with the condition that Barb buys herself something.  

Barb narrows her options down to four choices: Option A, Option B, Option C, and Option D.

The cost of each option is $100.  

She finally decides to go for option B.  

In this situation, her opportunity cost for choosing option B will be the second-best alternative or the value of the option she would have chosen had Option B not been available.

Opportunity cost of an economic decision is the the cost of second best alternative that the person has to give up in the process of making decision.

the investment was $14,174.196

explanation:

a lump sum means that the father of the example made one deposit and leave it be.

we need to know the value of a capital that generated at 4.05% per year during 28 years the sum of $48,613.24

now clearing the formula to solve for capital we got:

and we reach the answer investment = $14,174.20