An opportunity cost is a relevant incremental cost for capital budgeting decisions.

Question

Quizplus · Accepted Answer

Opportunity cost is the cost of the next best alternative that is foregone in order to pursue a certain action or decision. This is a relevant concept in capital budgeting decisions as it helps in comparing different options and choosing the one that provides the highest return relative to the opportunity cost. Therefore, opportunity cost is a relevant incremental cost for capital budgeting decisions.

An Opportunity Cost Is a Relevant Incremental Cost for Capital