If a company finances the purchase of an asset with cash, then it has zero financial cost to the company.

Question

Quizplus · Accepted Answer

Even if a company uses cash to finance the purchase of an asset, there is an opportunity cost for holding onto that cash instead of using it for other investments or operations. Therefore, there is a financial cost to the company for choosing to use cash for the purchase instead of another financing option.

If a Company Finances the Purchase of an Asset with Cash