You win a lottery of Rs.1,000,000/-, you have a choice between spending the money now or...

You win a lottery of Rs.1,000,000/-, you have a choice between spending the money now or putting it in a bank account for 5 years that pays you 5% per annum. Calculate the opportunity cost of spending money now?

Expert Solution

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

Interest= P*R*T

= 1000000× 0.05× 5

= 250000

Rahul Sunny answered 2 years ago

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