Question 655 capital budgeting, opportunity cost, sunk cost
The 'time value of money' is most closely related to which of the following concepts?
(a) Competition: Firms in competitive markets earn zero economic profit.
(b) Opportunity cost: The cost of the next best alternative foregone should be subtracted.
(c) Separation of the investment and financing decisions.
(d) Diversification: Risks can often be reduced by pooling them together.
(e) Sunk costs: Costs that cannot be recouped should be ignored.