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

question 61

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.
• C) The present value of $100,000, discounted at the firm's cost of capital, and "borrowed" for the life of the project.
• D) No opportunity cost is involved.

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Definitions:

Upstream Reciprocity

A concept in social psychology suggesting that the act of being helped often leads to an individual helping someone else other than their original benefactor.

Pro Social Behavior

Acts performed with the intention to benefit others, such as helping, sharing, or comforting.

Rule Of Law

The principle that all people and institutions are subject to and accountable to law that is fairly applied and enforced.

Broken

Refers to something that has been damaged or no longer functions in its intended or original way.