0
What else can I help you with?
What is an example of opportunity cost in a business decision-making process?
An example of opportunity cost in a business decision-making process is when a company chooses to invest in one project over another, resulting in the potential loss of revenue or benefits that could have been gained from the alternative project.
How does opportunity cost enter in to the make or buy decision?
The opportunity cost of a business decision is the value of the potential benefit of the next best opportunity foregone.For example, if I have one £100 to invest, and I can invest in project A, which will return me a profit of £300 or project B, which will return a profit of £150, then I will choose project A. The total cost of the project is:Cost of investment + opportunity cost = £100 + £150 = £250.The £150 in the above formula is the profit I would have made from the next best option for my investment (ie, project B).Since the total cost of my project (£250) is less than my profit (£300), then I have made the right decision. If I had chosen project B for my investment, my total cost would be (100+300=)£400, which is less than the profit of £250, and so I know I have made the wrong decision.In deciding how best to maximise return on capital, one must always consider the opportunity cost of one's investment. It is important to remember that there is always the alternative of simply investing one's money in the bank, earning nominal interest (say 5%). If the expected returns are not above this rate, then total cost (including opportunity cost) will exceed the return on investment and so the potential investment should not be made.
How could opportunity cost be examined?
Opportunity cost is the cost of the next-best choice available to someone who has to pick between several choices. It is a key concept in economics used to describe "the basic relationship between scarcity and choice". Opportunity cost is examined by selecting one option and then comparing the expected rewards of that option to the rewards of next option. If a company had money to invest in either marketing or production the opportunity cost of one would be the loss of benefit form not picking the other. For example if the company chooses to invest in marketing instead of improving manufacturing (its next best option) which would increased profits $100000 the opportunity cost of the decision is said to be $100000. If the company makes more than $100000 the company has made a good decision. If the increase in marketing does not make $100000 for the company the decision is considered not at as good as the lost opportunity-cost. It would have been more profitable to invest in the option not selected.
Meaning of opportunity cost?
The concept of opportunity cost is based on the notion that for every action you take or decision you make, you are losing the benefits of other options. Opportunity cost is that benefit of an opportunity that you lose by choosing some other opportunity.
Can you use the word profitable in a sentence?
It would not be profitable for me to invest further time in your project.
What is an example of opportunity cost in a business decision-making process?
An example of opportunity cost in a business decision-making process is when a company chooses to invest in one project over another, resulting in the potential loss of revenue or benefits that could have been gained from the alternative project.
How does opportunity cost enter in to the make or buy decision?
The opportunity cost of a business decision is the value of the potential benefit of the next best opportunity foregone.For example, if I have one £100 to invest, and I can invest in project A, which will return me a profit of £300 or project B, which will return a profit of £150, then I will choose project A. The total cost of the project is:Cost of investment + opportunity cost = £100 + £150 = £250.The £150 in the above formula is the profit I would have made from the next best option for my investment (ie, project B).Since the total cost of my project (£250) is less than my profit (£300), then I have made the right decision. If I had chosen project B for my investment, my total cost would be (100+300=)£400, which is less than the profit of £250, and so I know I have made the wrong decision.In deciding how best to maximise return on capital, one must always consider the opportunity cost of one's investment. It is important to remember that there is always the alternative of simply investing one's money in the bank, earning nominal interest (say 5%). If the expected returns are not above this rate, then total cost (including opportunity cost) will exceed the return on investment and so the potential investment should not be made.
How could opportunity cost be examined?
Opportunity cost is the cost of the next-best choice available to someone who has to pick between several choices. It is a key concept in economics used to describe "the basic relationship between scarcity and choice". Opportunity cost is examined by selecting one option and then comparing the expected rewards of that option to the rewards of next option. If a company had money to invest in either marketing or production the opportunity cost of one would be the loss of benefit form not picking the other. For example if the company chooses to invest in marketing instead of improving manufacturing (its next best option) which would increased profits $100000 the opportunity cost of the decision is said to be $100000. If the company makes more than $100000 the company has made a good decision. If the increase in marketing does not make $100000 for the company the decision is considered not at as good as the lost opportunity-cost. It would have been more profitable to invest in the option not selected.
Can a state government invest in railway project?
Yes. A state government can invest in a railway project.
How is sunk costs related to discounted cash flow?
In DCF calculation only the incremental has to be considered. That means that sunk costs (cost that have been spent in the past) or costs which would be spent independently from the project are not taken into account. On the other hand opportunity costs have to be considered. e.g: - equipment and machines already exist and cannot be allocated to other projects furthermore selling into the market is not possible too => sunk cost wont influence the project decision thats why they wont be considered in the DCF calculation - equipment and machines exists already but can be used for other existing production as replacement eg. In this case the machine has be considered because otherwise the company has to invest money for the replacement of the existing production (opportunity costs) BR Dirk
How can one invest in Nigeria?
To invest in Nigeria, you have to firstly find the perfect investment opportunity.
What if your firm has a risk-free investment opportunity where it can invest 160000 today and receive 170000 in one year for what level of interest rates is this project attractive?
170000/160000-1= .0625 = 6.25%
Meaning of opportunity cost?
The concept of opportunity cost is based on the notion that for every action you take or decision you make, you are losing the benefits of other options. Opportunity cost is that benefit of an opportunity that you lose by choosing some other opportunity.
Can you use the word profitable in a sentence?
It would not be profitable for me to invest further time in your project.
Where the insurance company invest their funds?
the insurance companies invest their fund in any profitable business opportunity such as in making roads, establishing bridges, tunnels and many more similar projects
What does the term mutually exclusive investments mean?
Mutually exclusive investments means that if you choose to invest in Investment A that you can not invest in Investment B and vice versa. This may be caused by either contractual limitations (i.e. possibly a governmental regulator may forbid a corporation from buying both Company A and Company B) or by a lack of sufficient funds to invest in both (i.e. if you have only $100K to invest and you invest in a $100K bond, you will not have any money left to invest elsewhere).
What does proposal mean in a science project?
It's a written offer, which tries to convince a supervisor or a future customer to accept it. It usually states that, in exchange for time and/ or money, you will give them something they want. In other words you are asking a decision-maker to invest in a resource
