James overspent and will need yo spend the next six months paying off his credit card bill. This money was supposed to have gone into his investment account which earns 10 percent annually. What type of cost is this 10 percent
It is the cost of capital, which is the rate of return on the next best alternative of the investment. That is to say had she saved, she could have enjoyed the 10%, which is her cost of overspending.
