Which of the Following Statements About the Opportunity Cost Associated

Multiple Choice

Which of the following statements about the opportunity cost associated with a capital budgeting project is correct?

A) A project's opportunity cost is a cash outlay that the firm has already paid; therefore, it should not be included in a capital budgeting analysis.
B) The terms sunk cost and opportunity cost generally are used interchangeably.
C) A project's opportunity cost is the return (cash flow) that will not be earned (generated) if funds are invested in a particular capital budgeting project.
D) A project's opportunity cost is not a relevant cash flow, therefore it should not be included in the capital budgeting analysis.
E) A project's opportunity cost reflects the change in a firm's net cash flow that is attributable to purchasing the project.