The opportunity cost of an asset:
A)Should be depreciated annually
B)Can differ depending on market conditions
C)Is typically ignored in capital budgeting
D)is important only for parcels of land

Question

Quizplus · Accepted Answer

The opportunity cost of an asset can vary depending on market conditions, and this variability should be taken into account when making capital budgeting decisions. Depreciation is a separate concept related to the accounting treatment of the asset's decrease in value over time. The importance of opportunity cost is not limited to parcels of land, but applies to any asset or investment decision.

The Opportunity Cost of an Asset