Which of the Following Is an Example of a Capital

question 33

Multiple Choice

Which of the following is an example of a capital cost that would be considered a part of inventory costs?

• A)opportunity costs resulting from tying up funds in inventory instead of using them in other, more profitable investments
• B)warehousing space and materials handling costs
• C)costs due to possible loss, damage, pilferage, or obsolescence
• D)costs of the finished goods inventory itself

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Definitions:

Annual Payments

Regular amounts paid once a year, often used in the context of loan repayments or investment returns.

Interest Rate

The amount charged by a lender to a borrower for the use of assets, expressed as a percentage of the principal.

Lease Payments

Regular payments made by a lessee to a lessor for the use of an asset.

Cost of Funds

The interest rate that financial institutions pay for the use of money or funds they lend out to borrowers.