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If the opportunity cost of capital for a project exceeds the projects IRR then the project has a NPV negative?
If the opportunity cost of capital for a project exceeds the Project's IRR, then the project has a(n)
What is opportunity cost rate?
The opportunity cost rate is the rate of return you could earn on an alternative investment of similar risk.
What is opportunity cost and opportunity benefit?
Opportunity cost is the cost that an opportunity presents. The opportunity benefit is the benefit of the opportunity that is being presented.
What happens when marginal cost exceeds average total cost?
MC is the cost of producing one extra good, so if the cost of producing that one extra good is above the average, then the ATC increases.
Is an investment an implicit cost?
Yes, investment is an implicit cost because it is a firm investing their own money in something that (by definition of an opportunity cost) could have been invested in something else. Investment is the opportunity cost of a firm using their own money, and whether or not the opportunity that the firm invested in is worthwhile is defined by the NROR (the normal rate of return).
If the opportunity cost of capital for a project exceeds the projects IRR then the project has a NPV negative?
If the opportunity cost of capital for a project exceeds the Project's IRR, then the project has a(n)
What is opportunity cost rate?
The opportunity cost rate is the rate of return you could earn on an alternative investment of similar risk.
What is opportunity cost and opportunity benefit?
Opportunity cost is the cost that an opportunity presents. The opportunity benefit is the benefit of the opportunity that is being presented.
What happens when marginal cost exceeds average total cost?
MC is the cost of producing one extra good, so if the cost of producing that one extra good is above the average, then the ATC increases.
What happens when the optimal use of a resource takes place?
The benefit is greater than the opportunity cost.
What is The optimal use of a resource takes place when happens?
The benefit is greater than the opportunity cost.
Is an investment an implicit cost?
Yes, investment is an implicit cost because it is a firm investing their own money in something that (by definition of an opportunity cost) could have been invested in something else. Investment is the opportunity cost of a firm using their own money, and whether or not the opportunity that the firm invested in is worthwhile is defined by the NROR (the normal rate of return).
What does the word opportunity cost means?
Opportunity cost means that there is an opportunity to get something in a lower cost. __by Alondra Rico
What calculates the opportunity cost?
Opportunity cost is something for the next porpose.
What happens if a company over invests in net working capital?
If a firm over invest in net working capital, it incurs cost in the form of opportunity cost.
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.
Is opportunity cost a relevant cost?
Yes, opportunity cost is a relevant cost because it can be used in something more productive.
