Opportunity Cost

question 65

Multiple Choice

Opportunity Cost:

• A)only includes explicit,out of pocket expenses.
• B)is the value of your next best alternative.
• C)is never provided in dollar values.
• D)would not include the wages lost from working when deciding to take a vacation.

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Definitions:

Sustainable Growth Rate

The maximum rate at which a company can grow its sales, earnings, and dividends without increasing its equity and while maintaining its existing debt-equity ratio.

Debt-Equity Ratio

A calculation to determine a business's leverage by dividing its liabilities by the equity of its stockholders.

External Equity Financing

This term refers to the process through which a company raises capital by selling its shares to external investors, outside the existing shareholders or company insiders.

Internal Growth Rate

The maximum growth rate a firm can achieve without external financing, based on reinvestment of its own earnings.