What is economic net benefit and opportunity cost

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Jean recently bought a building for $10 million financed entirely through a 20-year bank loan. The interest rate on the loan is 3 percent per year. After buying the building, Jean wins a $10 million lottery. Should Jean pay off the bank loan right away? Describe the decision qualitatively (using the concept of economic net benefit). No numerical calculations are necessary.

My confusion is that if I calculate present value of interest on the $10 Mill loan to the bank, it will be $4.46 mill. so what is the economic net benefit and opportunity cost? Could you please walk me through how you would solve this problem?

Reference no: EM133341303

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