Explicit Costs Are

question 163

Multiple Choice

Explicit costs are

• A) the opportunity cost of the means of production.
• B) always paid out of pocket.
• C) always greater than implicit costs.
• D) never greater than implicit costs.
• E) what a business sacrifices in order to produce a good.

---

Definitions:

Common Equity

The amount of money that would be returned to shareholders if all the assets were liquidated and all the company's debt was paid off.

WACC

Weighted Average Cost of Capital, a measure used to estimate the average rate a company pays to finance its assets, factoring in both debt and equity.

DCF Approach

The Discounted Cash Flow (DCF) approach is a valuation method used to estimate the value of an investment based on its expected future cash flows, adjusted for the time value of money.

Cost of Equity

The return a company theoretically pays to its equity investors to compensate them for the risk of investing in the company's stock.