Question.3549 - 1. What is opportunity cost and why is it an important concept in the capital budgeting process? The opportunity cost concept applies to almost every financial decision we make as individuals. Can you give an example from your own experience?2. What is capital rationing from the perspective of capital budgeting?3. Give an example of a strength and a weakness of the accounting rate of return approach.
Answer Below:
What xx opportunity xxxx and xxx is xx an xxxxxxxxx concept xx the xxxxxxx budgeting xxxxxxx The xxxxxxxxxxx cost xxxxxxx applies xx almost xxxxx financial xxxxxxxx we xxxx as xxxxxxxxxxx Can xxx give xx example xxxx your xxx experience xxxxxxxxxxx cost xxxxxxxx refers xx the xxxxxxxxxx that xxx waived xxxx one xxxxxxxxxxx is xxxxxxx over xxxxxxx Mankiw xx capital xxxxxxxxx it xx crucial xxxxxxx businesses xxxx assess xxxx they xxx sacrificing xx investing xx one xxxxxxx rather xxxx another xxx example x had xxx all xx investment xx Project x which xxx for xxxxxxxxx blind xxxxxxxx the xxxxxxxxxxx cost xxxx I xxx was x return xxxx Project x which xxx from xxx crowdfunding xxxxxxxx we xxx In xx opinion xxxxxxxx to xxxx money xxx future xxxxxxxxxxx rather xxxx spending xx now xxxxxxx opportunity xxxxx What xx capital xxxxxxxxx from xxx perspective xx capital xxxxxxxxx Capital xxxxxxxxx in xxxxxxx budgeting xxxxxxx when x company xxxx a xxxxxxx stop xx its xxxxxxxxxxx due xx financial xxxxxxxxxxx Ross xx al xxxxx distribute xxxxx to xxx most xxxxxxxxx projects xxxxx by xxxxxxx projects xxxxxxx metrics xxxx net xxxxxxx value xxx and xxxxxxxx rate xx return xxx Give xx example xx a xxxxxxxx and x weakness xx the xxxxxxxxxx rate xx return xxxxxxxx A xxxxxxxx of xxx accounting xxxx of xxxxxx ARR xxxxxxxx is xxx simplicity xx it xxxx readily xxxxxxxxx accounting xxxx Brigham xx al xxxxxxx the xxxxxxxx is xxxx it xxxxxxxxx the xxxx value xx money xxxxxxxx future xxxxxxxx as xxxxxxx valuable xx current xxxxxxxx which xxx distort xxxxxxxxxx evaluations xxxxxxxxx Brigham x F xxx Ehrhardt x C xxxxxxxxx management xxxxxx and xxxxxxxx th xx Cengage xxxxxxxx Mankiw x G xxxxxxxxxx of xxxxxxxxx th xx Cengage xxxxxxxx Ross x A xxxxxxxxxxx R x amp xxxxx J xxxxxxxxx finance xx ed xxxxxxxxxxx EducationMore Articles From Management
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