Which of the Following Is NOT an Implicit Cost

question 255

Multiple Choice

Which of the following is NOT an implicit cost?

• A) wages
• B) opportunity cost of using an owner's savings
• C) owner-provided capital
• D) owner-provided labor

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Definitions:

Internal Rate of Return

A financial metric used to evaluate the profitability of potential investments, calculated as the discount rate that makes the net present value of all cash flows equal to zero.

Quantitative Decision Rule

A structured approach that uses mathematical models and numerical data to help make decisions.

Time Value of Money

The concept that money available now is worth more than the same amount in the future due to its potential earning capacity.

Discounted Cash Flow

A valuation method used to estimate the value of an investment based on its expected future cash flows, adjusted for the time value of money.