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Which one of the following is correct. An opportunity cost may be defined as follows :

<p>a. Net Benefit related to an alternative course of action, not undertaken.</p> <p>b Net Benefit related to an alternative course of action, undertaken.</p> <p>c Net cost of availing an opportunity.</p>

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Question ajoutée par Utilisateur supprimé
Date de publication: 2014/09/18
imran Noor -
par imran Noor - , Audit Officer , Auditor General of Pakistan

The correct option is (A)

Khan Sohal khan
par Khan Sohal khan , Associate , State Street Syntel Services Pvt Ltd.

a is correct

Khaled Abdelrehim ACCA DipIFR CMA
par Khaled Abdelrehim ACCA DipIFR CMA , Financial Analysis Assistant General Manager , Khalda Petroleum Company

answer A. the benefit forgone by not taking the other alternative

Ramendra Sunder Sinha PMP
par Ramendra Sunder Sinha PMP , DGM Planning , Gaur Sons Limited

None of the3 options is correct.

Opportunity Cost is defined as the cost in terms of profitability that an individual or Company has lost on account of not undertaking the project or operations. It is thus treated as a Loss and not as a Profit.

I am giving a simple example :

A Company has to make a choice of taking up any1 of the following2 Projects (A & B).

 

Project A : Has a NPV of Plus1 Million USD over5 years.

Project B : Has a NPV of Plus2 Million USD over5 years.

 

Due to obvious reasons the Company takes up Project B and sacrifices Project A which may be taken up by another Company.

Thus the Opportunity Cost of the first Company is1 Million USD over5 years.

ahmed sameer morsy
par ahmed sameer morsy , Financial Manager , EAST FLEET TRADING COMPANY

A- Net Benefit related to an alternative course of action, not undertaken

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