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10 May, 17:34

The cost of a resource that may be relevant to an investment decision even when no cash changes hand is called

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  1. 10 May, 17:56
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    Opportunity cost

    Explanation:

    The cost that is relevant to the decision when cash does not exchange hand is called Opportunity cost which is the benefit forgone by an individual firm or investor by choosing one alternative over the other. It can be calculated by the formula

    OP = Return on best forgone - return on chosen option

    Investors clearly analyse investment or decisions using opportunity cost concept so as to maximizes the possible gain and reduce the benefit they stand to lose on investing in another business or making an alternate decision.
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