Opportunity Costs Include Those Cash Inflows That Could Be Generated

question 29

True/False

Opportunity costs include those cash inflows that could be generated from assets the firm already owns if those assets are not used for the project being evaluated.

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Definitions:

Units

Basic quantities or measurements, used as standards for expressing and comparing quantities.

Accounting Profit

The net income for a company after all expenses have been subtracted from total revenue, according to standard accounting practices.

Explicit Costs

Direct, out-of-pocket expenses incurred in the operation of a business or the execution of a transaction.

Production

The process or method of creating goods and services through the combination of labor, materials, and technology.