A 5-Year Project Requires an Additional Commitment of $100,000 in Net

question 45

Multiple Choice

A 5-year project requires an additional commitment of $100,000 in net working capital. What is the opportunity cost associated with this investment?

• A) $100,000
• B) The present value of $100,000 discounted at the firm's cost of capital for 5 years
• C) The present value of $100,000 discounted at the firm's cost of capital for 5 years minus $100,000
• D)No opportunity cost is involved.

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Definitions:

Formation Of Soil

The process by which rocks are broken down by physical, chemical, and biological factors leading to the creation of soil, a critical resource for plant growth.

Biological, Chemical

Terms that describe processes or substances related to living organisms (biological) and interactions involving substances in and changes to matter (chemical).

Physical Processes

Natural phenomena or sequences of events involving change in the physical properties of matter or energy.

Cation Exchange

A process where cations are exchanged between a solution and a cation exchange material, often soil or resin.