opportunity cost

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opportunity cost

n. Economics
The net value or utility of the most desirable alternative to a projected course of action.

opportunity cost

n
(Economics) economics the benefit that could have been gained from an alternative use of the same resource

opportunity cost

The benefit that is sacrificed by choosing one course of action rather than the next best alternative, e.g. the opportunity cost sacrificed in building a road might be use of the land for farming.
ThesaurusAntonymsRelated WordsSynonymsLegend:
Noun1.opportunity cost - cost in terms of foregoing alternatives
cost - the total spent for goods or services including money and time and labor
capital cost, cost of capital - the opportunity cost of the funds employed as the result of an investment decision; the rate of return that a business could earn if it chose another investment with equivalent risk
carrying cost, carrying charge - the opportunity cost of unproductive assets; the expense incurred by ownership
References in periodicals archive ?
We make use of CAPM to estimate the opportunity cost of capital for venture capital investment of well-diversified investors.
He also recognizes that, from time to time, when there is excess capacity, the opportunity cost of capital will drop.
In equilibrium, the opportunity cost of capital must be equal to the sum of the cash flow plus the expected (and actual) appreciation.
Of course, the opportunity cost of capital will generally exceed the financial cost of capital because one does not normally borrow money in business affairs unless one expects to make a profit on the money borrowed.
Hence, the opportunity cost of capital or required rate of return will typically depend on total risk, not just systematic or market risk, in these circumstances.
A candidate variable for resolution of uncertainty is the opportunity cost of capital.
Acquiring capital from internal sources requires that executives determine the opportunity cost of capital invested to back businesses and strategies.
However, the EMH does not prevent firms from earning economic rents, defined as profits that cover the opportunity cost of capital, which is a concept identical to EVA.
Approximately half of the Tufts-industry estimates are attributed to financing costs, known as the opportunity cost of capital.

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