The Extra Cost That Results from an Extra Unit of an Activity

question 97

Multiple Choice

The extra cost that results from an extra unit of an activity is the:

• A) marginal benefit.
• B) marginal cost.
• C) reservation cost.
• D) same as the opportunity cost.

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Definitions:

Net Present Value

Net present value is the calculation to determine the present value of a series of future cash flows minus the initial investment cost, used to assess the profitability of investments.

Net Cash Inflows

The total amount of money received from an investment, project, or business operation, after deducting all associated cash outflows.

Discount Rate

The discount rate applied in the computation of present value through discounted cash flow analysis for future cash flows.

Net Present Value

The difference between the present value of cash inflows and the present value of cash outflows over a period of time.