In a scenario where a business owner decides to invest $10,000 in a new project instead of using that money to pay off existing debts, what is the opportunity cost of this decision?

Opportunity cost is what you give up when you choose one option over another. In this case, the business owner is spending $10,000 on a new project instead of paying off existing debts. The opportunity cost is the benefits that could have been gained from paying off those debts, such as reduced interest payments or improved credit rating. For example, if paying off the debts would save the owner $1,000 in interest over the year, that $1,000 is the opportunity cost of investing in the new project. Understanding opportunity cost helps business owners make better decisions by considering what they might lose by not choosing the alternative.