An Example of Opportunity Cost Is the

question 94

Multiple Choice

An example of opportunity cost is the

• A)income that a person does not earn because she has retired and decided not to work at all.
• B)pleasure that an economics student derives from studying economics.
• C)Chinese food that you gave up when you chose to eat Italian food.
• D)tuition you pay to attend college.
• E)price paid for a concert ticket when you go to that concert.

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Definitions:

Capital Accounts

Financial records showing the ownership interests and funds contributed or withdrawn by owners or investors in a company.

Target Capital Structure

The ideal mix of debt, preferred stock, and common equity that a company aims to hold in order to minimize its cost of capital and maximize its value.

Floatation Costs

Expenses incurred by a company in issuing new securities, including underwriting fees and registration fees.

WACC

Weighted Average Cost of Capital - a measure of a firm's cost of capital in which each category of capital is proportionately weighted.