The ____ of a resource is its value in its best alternative use and is included in capital budgeting analysis.
A)opportunity cost
B)sunk cost
C)incremental cash flow
D)None of the above

Question

Quizplus · Accepted Answer

The concept of opportunity cost is essential in capital budgeting analysis as it considers the value of a resource in its best alternative use. This cost is the value of the opportunity foregone by choosing one alternative over the other. Sunk cost refers to the cost that has already been incurred and cannot be recovered, while incremental cash flow is the difference between cash inflows and cash outflows resulting from a project. Therefore, the correct answer is A) opportunity cost.

The ____ of a Resource Is Its Value in Its