The opportunity cost of capital for a consumer's investment decision depends on their financial situation. Which rate should the consumer use?

A) The interest rate on investment opportunities if the consumer is a net saver
B) The interest rate paid on debts if the consumer is a net debtor
C) A and B are correct.
D) The same interest rate that local firms use to analyze their investment opportunities

Opportunity Cost

The cost of forgoing the next best alternative when making a decision.

Capital

The financial assets or resources that individuals or companies use to fund their operations and invest in their businesses.

Financial Situation

An individual's or organization's current status in terms of income, expenses, assets, and liabilities, impacting their ability to generate cash flow and meet financial obligations.