Consider two costing systems,normal costing and actual costing.
Definitions:
Opportunity Cost of Capital
The return foregone by investing in a project instead of in comparable financial assets with similar risk.
Net Present Value
Net Present Value (NPV) is a financial metric that calculates the present value of all future cash flows (positive and negative) expected from an investment, adjusted for time and interest.
Profits
The financial gain achieved when the revenues from business activities exceed the expenses, costs, and taxes involved in sustaining the activity.
Nominal Interest Rate
The rate of interest before adjustments for inflation, representing the surface rate charged on loans or earned on investments.
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