Mariana needs $20,000 to start up her own business and get it off the ground. She can either withdraw the money from her savings account, where she currently earns 1.5 percent interest, or she can take out a loan for $20,000 and pay 4 percent interest. Which of the following statements is true?The implicit cost of taking out a loan is $300.The explicit cost of taking out a loan is $800.The implicit cost of withdrawing money from her savings account is $300. A)I only B)II only C)II and III only D)I, II and III

Question

Quizplus · Accepted Answer

The explicit cost of taking out a loan is the actual interest Mariana would pay on the loan, which at 4 percent of $20,000 is $800. The implicit cost of withdrawing money from her savings account is the interest she would forgo by not leaving her money in the account, which at 1.5 percent of $20,000 is $300.

Mariana Needs $20,000 to Start Up Her Own Business and Get