If an investment project would make use of land which the firm currently owns,the project should be charged with:
A)a sunk cost.
B)an opportunity cost.
C)amortization.
D)interest.
E)abuse of power.

Question

Quizplus · Accepted Answer

The cost of using land that the firm already owns for a new investment project is an opportunity cost. This is because the land could have been used for an alternative purpose or could have been sold or leased to another party, which would have generated a certain amount of income or return. By using the land for a new investment project, the firm foregoes this potential income, which represents the opportunity cost.

If an Investment Project Would Make Use of Land Which