Opportunity costs include those cash inflows that could be generated from assets the firm already owns,if those assets were not used for the project being evaluated.

Question

Quizplus · Accepted Answer

Opportunity cost refers to the benefits or cash inflows that are forgone when one alternative is chosen over another. In the context of capital budgeting, opportunity costs include the potential cash inflows that could be generated from assets the firm already owns if those assets were not used for the project being evaluated. Therefore, the statement is true.

Opportunity Costs Include Those Cash Inflows That Could Be Generated