Question
Which of the following statements about the opportunity cost associated with a capital budgeting project is correct? A project's opportunity cost is a cash outlay
Which of the following statements about the opportunity cost associated with a capital budgeting project is correct?
A project's opportunity cost is a cash outlay that the firm has already paid; therefore, it should not be included in a capital budgeting analysis. | ||
The terms sunk cost and opportunity cost generally are used interchangeably. | ||
A project's opportunity cost is the return (cash flow) that will not be earned (generated) if funds are invested in a particular capital budgeting project. | ||
A project's opportunity cost is not a relevant cash flow, therefore it should not be included in the capital budgeting analysis. |
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