Question

Nike decides to invest $60,000,000 into a shoe factory in Vietnam from its money market account. The money market account was earning 1% in interest per year or $600,000. Nike could have also earned $200,000 from investing the $60,000,000 in a handbag factory. What is its opportunity cost for Nike based off of the information in presented this situation

Answer 1

$200,000

Step-by-step explanation:

Opportunity cost is the cost of the next best option forgone when one alternative is chosen over other alternatives.

The opportunity cost of Nike is what they would have earned if they invested in the bag industry instead. so it is, $200,000.

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