As an illustration of opportunity cost, assume a MARR of 12% per year. Further, assume that a proposal A with an expected ROR = 13% is not funded due to a lack of capital. Meanwhile, proposal B has a ROR = 14.5% and is funded from available capital.
Added by Katie W.
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Opportunity cost = MARR - ROR of proposal A Opportunity cost = 12% - 13% Opportunity cost = -1% Show more…
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