Answer to Question #249367 in Microeconomics for akas

Question

You win Rs 10,000 in a horse race. You have a choice between spending the money now and putting it in a 5% FD. What is the opportunity cost of spending the Rs 10,000 now?

Answer 1

The opportunity cost would be the interest foregone by not investing the money

$Interest= P \times R \times T$

Let use T = 5 years

$= 10000 \times 0.05 \times 5 \\ = 2500$