An Example of an Implicit Cost Is

question 156

Multiple Choice

An example of an implicit cost is

• A) a payment on the loan for a piece of equipment not in use.
• B) a payment on an electricity bill.
• C) wages paid to employees.
• D) gasoline costs.
• E) forgone wages.

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Definitions:

WACC

A measure of a firm's blended cost of capital across all sources, including equity and debt.

NPV

Net Present Value is the calculation used to determine the value of future cash flows in today's dollars, subtracting the initial investment.

Multiple IRRs

Situations where a project or investment has more than one internal rate of return, occurring with alternating cash flows (positive and negative).

Cash Flows

Cash flow is the net amount of cash being transferred into and out of a business, considered essential for its operation, liquidity, and financial health.