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

Question

Quizplus · Accepted Answer

Opportunity costs refer to the potential benefits that could be generated from the next best alternative when making a decision. In the context of capital budgeting, it means the cash inflows that could be generated from assets the firm already owns if those assets are not used for the project being evaluated. Therefore, the statement is true.

Opportunity Costs Include Those Cash Inflows That Could Be Generated