answersLogoWhite

0

What else can I help you with?

Related Questions

What is opportunity cost rate?

The opportunity cost rate is the rate of return you could earn on an alternative investment of similar risk.


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 is the difference between a chosen investment and one that is passed up?

opportunity cost


What is opportunity cost and can you provide an example of how it applies in decision-making?

Opportunity cost is the value of the next best alternative that is forgone when a decision is made. For example, if you choose to spend money on a vacation, the opportunity cost is the potential investment or savings you could have made with that money instead.


Why is the cost of capital concept so important?

Cost of capital is cost of debt and cost of equity. The concept of cost of capital is important as it depicts the opportunity cost of making a specific investment.


How do you determine the opportunity cost of an investment and why is it important to consider in financial decision-making?

Opportunity cost of an investment is the potential benefit that is foregone by choosing one investment option over another. It is important to consider in financial decision-making because it helps in evaluating the best use of resources and making informed choices that maximize returns.


How does opportunity cost enter in to the market of buy decession?

Opportunity Costs are those indirect costs which account for the benefits sacrificed for the funds utilized in a particular decision of investment. In cost analysis, when ascertaining the investment portfolio, The benefits foregone for it needs to be considered so that the relative comparison of the investment avenues in terms of return could be compared and a suitable decision could be made. Thus we see that the buy decisions are influenced by a set od direct and indirect cost considerations, of which the "opportunity cost" is one element.


What is the opportunity cost to a fully employed economy of increasing capital investment?

A fall in consumption


What is the probability of profit for this investment opportunity?

The probability of profit for this investment opportunity is the likelihood that you will make money from it.


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.


What are the key factors to consider when evaluating the cafci of a potential investment opportunity?

When evaluating the cafci of a potential investment opportunity, key factors to consider include the potential return on investment, the level of risk involved, the market conditions, the credibility of the investment opportunity, and the alignment of the opportunity with your financial goals.


What is the concept of opportunity cost reference to investor?

The opportunity cost with reference to an investor would be the income he wud have earned had he used(invested) his money for some oder purpose. e.g. opp. cost for investing in mutual fund can be the interest of the amt. of investment offered by a bank, (or any other kind of interest, dividend or return) which the investor had to forgo to receive benefit from his investment.