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:

Diluted Earnings

A calculation of a company's earnings that takes into account all potential shares that could be claimed or converted into common stock, impacting the earnings per share metric.

Weighted Average

A calculation that takes into account the varying degrees of importance of the numbers in a data set, assigning weights to some of the numbers more than others.

Stock Options

Financial instruments granting the holder the right, but not the obligation, to buy or sell a stock at a specified price within a certain period.

GAAP

Generally Accepted Accounting Principles, which are standards and conventions for financial reporting in the United States.