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Business, 21.10.2020 16:01 VampireQueen01

7. Another example of opportunity cost is a company's cost of capital. Suppose a manufacturer wants to add microwave ovens to its product line. To do this, it must invest $500,000 in new equipment.

Besides the original investment, the company estimates it would spend $200,000 per year on production

costs for labor and materials. It also estimates that it could sell about $225,000 worth of microwave ovens

each year. Would it benefit the company to manufacture the microwave ovens if it could earn 10 percent

interest by purchasing U. S. Treasury bonds with the $500,000? Explain your answer.

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