Asked by
Kirsten Brophy
on Dec 01, 2024Verified
Which of the following is true of opportunity costs?
A) Not included in initial cash flow
B) Must be estimated and included in the cash flows of the project
C) Similar to sunk costs
D) Should be ignored by the firm
E) Similar to fixed costs
Opportunity Costs
The expense incurred by not choosing the second-best option available during decision-making.
Initial Cash Flow
The first influx or outflow of cash associated with an investment or project, marking the beginning of its cash flow timeline.
Sunk Costs
Expenses that have already been incurred and cannot be recovered, which should not influence future business decisions.
- Distinguish and embed opportunity costs in analyses of project cash flows.
Verified Answer
AA
Learning Objectives
- Distinguish and embed opportunity costs in analyses of project cash flows.