Opportunity Cost Of Capital. Example of the opportunity cost of capital for example the senior management of a business expects to earn 8 on a long term 10 000 000 investment in a new manufacturing facility or it can invest the cash in stocks for which the expected long term return is 12. This may occur in securities trading or in other decisions.
5 of 2 000 000 is 100 000. The opportunity cost of capital let s say i could have gotten 5 on my 2 000 000. It is not an explicit cost which is paid out of the pocket.
It is not an explicit cost which is paid out of the pocket.
5 of 2 000 000 is 100 000. For example if a person has 10 000 to invest and must choose between stock a and stock b the opportunity cost is the difference in their returns. Example of the opportunity cost of capital for example the senior management of a business expects to earn 8 on a long term 10 000 000 investment in a new manufacturing facility or it can invest the cash in stocks for which the expected long term return is 12. The opportunity cost of capital 1.
