What is opportunity cost in finance
[DOC File]Study guide for Economics Unit I test
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Define opportunity cost. How many opportunity costs does a consumer have when making a decision? What are you showing when you create a production possibilities frontier? What is it called when a nation produces INSIDE the PPF curve? List some causes: A rational decision occurs when the marginal benefits _____ or _____ marginal cost.
[DOC File]Edu @ Thinus - Home
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The opportunity cost of a particular choice is the value of the best opportunity forgone (sacrificed) as a result of the choice. The central elements of economics are scarcity and choice. Which one of the following is a microeconomic issue?
[DOC File]FIN 357 - Business Finance - Ducic 03635
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Opportunity cost: All projects must provide an acceptable rate of return. This return, often called the required rate of return, the discount rate, the hurdle rate, cost of capital, is the opportunity cost: the basis for all decisions. This is the most important concept in our course! Study Guidelines
[DOC File]Opportunity Cost of Capital
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If you discount at a rate r > opportunity cost of capital. then intuitively you would be willing to pass up the chance to spend less to create the cash flow than you could finance the same cash flow for in the market. You would be willing to just give up the use of cash equal to the difference, which is ridiculous.
[DOC File]Sunk and Opportunity Costs
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It is a sunk cost. An opportunity cost would be the resale value of the machine. Suppose you could sell it for $4 million. Then the cost of using the machine is $4 million, not the $10 million that had been paid. Another interesting consideration regarding opportunity costs is that one should always consider the opportunity costs of inputs provided by owners. Firms typically purchase inputs like labor and materials.
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