_________ refers to the most valuable alternative that is given up if a particular investment is undertaken?
Correct answer: B. Opportunity cost
- A. Sunk cost
- B. Opportunity cost
- C. Financing cost
- D. All of the given options
Explanation
Opportunity cost is the value of the best alternative sacrificed when a particular investment is chosen. Sunk costs are past costs that cannot be recovered and therefore should not affect the current choice.
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About Business Finance
Business finance explains how organisations plan, obtain and use money while balancing risk, return and liquidity. Topics include financial statements, time value of money, budgeting, working capital, capital structure, sources of finance, investment appraisal and cost of capital. Capital budgeting evaluates long-term projects, whereas working capital manages day-to-day operations.
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