Investing $230,000 in raw inventory today, mostly in higher quality gears shoule allow Jack's Fishing Reels to increase production and earn an additional $246,400 next year. This payoff would cover the investment today, plus a 12% return. Bob's trades on the S&P/TSX. They are currently able to borrow money at 4%, and are receiving 6% on their cash balances. The CEO has studied the history of returns on investments in carbon fibre and believes that investors in this commodity can reasonably expect a 13% return. What is the opportunity cost of capital and does that make Jack's Fishing Reel's investment a good idea under the circumstances? 12%, No 13%, No 6%. Yes 12%. Yes 13%. Yes Previous Page Next Page Page 13 of 23