Eric Decides to Open a Small Catering Business to Serve

question 26

Multiple Choice

Eric decides to open a small catering business to serve local businesses. Based on this information, what is his most likely source of funding?

• A) personal funds, family, and friends
• B) bank lending
• C) angel investor
• D) venture capital

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Definitions:

Sunk Cost

A cost that has already been incurred and cannot be recovered, which should not influence future decisions.

Incremental Cost

The additional cost that is incurred by producing one more unit of a good or service.

Opportunity Cost

This represents the benefits an individual, investor, or business misses out on when choosing one alternative over another.

Book Value

The net value of a company's assets minus its liabilities, as recorded on the balance sheet, often compared to its market value.