Ezra runs a gyro stall at the local farmers' market. he would like to expand and open his own shop downtown. he has made the cha
rt above, listing some potential costs and benefits of expansion. if ezra decides not to expand, what will be an opportunity cost of his choice?
1 answer:
If the missing chart is the chart in my attachment, Ezra's opportunity cost if he decides not to expand is most likely the 4TH BENEFIT which is MAKE AND SELL MORE FOOD ITEMS.
I chose that option among the benefits because it is the benefit that clearly translates into dollar values by being potential sales revenue. If Ezra gives up the idea of expanding, he will lose his potential sales or the opportunity to sell and gain more profit.
I chose that option among the benefits because it is the benefit that clearly translates into dollar values by being potential sales revenue. If Ezra gives up the idea of expanding, he will lose his potential sales or the opportunity to sell and gain more profit.
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- The expected return = = 12.84 %.
- The standard deviation = 22.8 %.
<u>Explanation</u>:
On the client's portfolio (total investment = 120 K + 80 K = 200 K,
- The expected return
= (12.4 %risk premium + 5.4 %risk free return) (120 K / 200 K) + 5.4 %
(80 K / 200 K)
= 17.8 % 0.6 + 5.4 %
0.4
= 12.84 %.
-
The standard deviation would be = 38 %
0.6 + 0%
= 22.8 %.