Asked by Sophia Michelle on Jul 09, 2024
Verified
The opportunity cost of capital is an implicit cost almost every business incurs.
Opportunity Cost
The cost of forgoing the next best alternative when making a decision or choosing between options.
Capital
Economic resources that are used to create goods and services, such as buildings, machinery, and equipment.
- Understand the concept of opportunity cost, especially in regards to capital.
Verified Answer
SG
Suheyl GodinezJul 12, 2024
Final Answer :
True
Explanation :
The opportunity cost of capital refers to the potential returns an investor misses out on when choosing one investment over another. For businesses, this cost is implicit when they allocate capital to one project instead of investing it elsewhere, potentially earning higher returns.
Learning Objectives
- Understand the concept of opportunity cost, especially in regards to capital.
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