The CFO is conducting a meeting and she says "we shouldn't accept this project because we...
The CFO is conducting a meeting and she says "we shouldn't accept this project because we should invest these funds in our Singapore operation, where we can achieve almost twice the return on investment." She is referring to
opportunity cost
incremental cost
sunk cost
operating cost
Homework Answers
Option '1' is correct
CFO is referring to Opportunity cost. Opportunity cost of making a particular choice is the value of the most valuable choice out of those that were not taken.
If the company has accepted the project, the company would miss the opportunity of getting twice the return on investment. If he hasn't accepted the project he would lose original return on investment, it was his opportunity cost.
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