the correct answer is?

Question

Frederick wants to redo his kitchen but also wants to save money for retirement. His retirement account is expected to earn 5% interest every year and redoing his kitchen would cost $15,000
. What is the opportunity cost for choosing to save the money for retirement?

5% of the initial $15,000
in the first year, plus 5% of the new total in that account in the second year, plus 5% more in the third year, and so on until he withdraws the money

the benefit he would get from redoing his kitchen

$15,000

5%

Answer 1

of $15,000 = $750

So, the opportunity cost of choosing to save the money for retirement instead of redoing his kitchen is $750.