The Opportunity Cost of Something You Decide to Get Is

question 312

Multiple Choice

The opportunity cost of something you decide to get is

• A) all the possible alternatives that you give up to get it.
• B) the highest valued alternative you give up to get it.
• C) the value of the item minus the cost you paid for it.
• D) the amount of money you pay to get it.

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Definitions:

Net Present Value

Net Present Value calculates the difference between the present value of cash inflows and the present value of cash outflows over a period, used to assess the profitability of investments.

Internal Rate

Often related to the internal rate of return (IRR), it is the discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero.

Cost Of Capital

The rate of return that a company must earn on its project investments to maintain its market value and attract investors.

Average Rate

Usually refers to the mean value of a set of rates or percentages over a specified period or set of conditions.