The value of resources used in a capital budgeting project should be measured in terms of their:
A)acquisition cost.
B)historical cost.
C)opportunity cost.
D)depreciated cost.

Question

Quizplus · Accepted Answer

The value of resources used in a capital budgeting project should be measured in terms of their opportunity cost, which is the potential benefit that could have been gained from using the resources in their next-best alternative use. This is because capital budgeting involves making choices among alternative investments and the opportunity cost reflects the value of the foregone alternative. The acquisition cost, historical cost, and depreciated cost are all accounting measurements that may not reflect the true economic value of the resources in a capital budgeting decision.

The Value of Resources Used in a Capital Budgeting Project