The most valuable investment given up if an alternative investment is chosen is a(n):
A) salvage value expense.
B) net working capital expense.
C) sunk cost.
D) opportunity cost.
E) erosion cost.

Question

Quizplus · Accepted Answer

The term "opportunity cost" refers to the benefit that is foregone or given up by choosing one investment option over another. It represents the most valuable investment given up by not choosing an alternative option. Therefore, option D is the correct answer. A is incorrect because salvage value is the amount received at the end of an asset's useful life, and it is not relevant to the choice between investment options. B is incorrect because net working capital expense is a current operating cash outflow, and it is not relevant to a comparison of investment options. C is incorrect because sunk costs are past expenditures that cannot be recovered and are therefore irrelevant to future investment decisions. E is not a commonly used term in investment analysis and is therefore an incorrect choice.

The Most Valuable Investment Given Up If an Alternative Investment