The Opportunity Cost of Capital

question 14

Multiple Choice

The opportunity cost of capital:

• A) is the interest rate that the firm pays on a loan from a financial institution.
• B) is the maximum acceptable rate of return on a project.
• C) is the minimum acceptable rate of return on a project.
• D) is always less than 10%.

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Definitions:

Business Expenses

Costs incurred in the ordinary course of business, including operational costs, utilities, salaries, and rent.

Tactical Plans

Short-range plans designed to implement the activities and objectives specified in the strategic plan.