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Suppose I want a car that cost $10,000. If I borrow the mone

Suppose I want a car that cost $10,000. If I borrow the money at… Show more How would you respond to this post? Suppose I want a car that cost $10,000. If I borrow the money at 7% interest per year, compounded annually, and I pay it back over 6 years, the amount I would have spent on the car is $14,200.00 total. My alternative is to save for perhaps 3 years until I have enough money to purchase the car outright. In this scenario, I must also consider inflation. If inflation is perhaps 2%, the $10,000 car I could have purchased is now $10,600.00 in 3 years. Therefore, the opportunity cost of buying the car right away is calculated as $14,200 – $10,600 = $3,600.00. However, the opportunity cost of not buying the car is having the use of it for 3 years, in addition to whatever transportation expenses I may have incurred. • Show less


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