You are working as a graduate within the engineering department of a manufacturing and consulting focused public listed company. You and your team are working on the post-COVID recovery and how best to allocate capital. Your team has $1,000,000 in capital at their disposal. The entire department is going to have a conference call next week and you have been asked to prepare a memo for the team regarding the financial options being considered. As the accounting department will be joining your memo is to prepare the staff for the call. The accountants are expected to use terms which may not be fully understood by the greater department. So your memo will be distributed before the call or you may be asked to speak on the call to assist everyone's understanding. The memo should discuss:

As there is still uncertainty about employees returning to work the capital may need to be moved from its current interest-bearing account elsewhere. Explain the opportunity cost associated with leaving the money in a bank account as opposed to other investment options that may mitigate that opportunity cost.

Answer rating: 100% (QA)

1 Opportunity cost is an economic term used to define the potential income that is to be given up It ... View the full answer