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 cost refers to the cost of the best alternative forgone, i.e., the cash inflows that could have been generated if the firm had used its existing assets for some other project instead of the one being evaluated. Therefore, the statement is true.

Opportunity Costs Include Those Cash Inflows That Could Be Generated