ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -The Difference Between Opportunity Cost and Sunk Cost A sunk cost is money already spent in the past, while opportunity cost is the potential returns not earned in the future on an investment because the capital was invested elsewhere.

Detailed explanation-2: -The Rule of 72 is a simple way to determine how long an investment will take to double given a fixed annual rate of interest. By dividing 72 by the annual rate of return, investors obtain a rough estimate of how many years it will take for the initial investment to duplicate itself.

Detailed explanation-3: -You can also generate a monthly income using a fixed annuity. A $500, 000 annuity would pay $29, 519.92 per year if you allow your interest to accumulate and make a withdrawal annually. A $500, 000 annuity would pay you $2, 395.83 interest per month. Fixed annuities pay a specified interest rate for a set period of time.

Detailed explanation-4: -Budgeting and saving goals within a financial plan. Investing as part of a financial plan. Estate planning goals within a financial plan. Insurance’s role within a financial plan.