Question

Let’s take the same example but add a little more complexity. So far we have assumed there was no resale value for the work already completed. Assume that the company could sell the half developed project to another property firm for $60m. The $60m now becomes an opportunity cost, as it is money that could be received. As we have already discussed opportunity costs are relevant costs and so MUST be considered when making a decision.

Answer 1

Opportunity cost is the arrival of an inescapable alternative not exactly the arrival on your picked choice.

Considering opportunity expenses can control you to an increasingly beneficial dynamic.

You should evaluate the overall danger of every alternative notwithstanding its expected returns.

Opportunity costs speak to the advantages an individual, financial specialist, or business passes up while picking one option over another. While budgetary reports don't show opportunity cost, entrepreneurs can utilize it to settle on instructed choices when they have different alternatives before them. Bottlenecks are frequently a reason for circumstance costs.

Since by definition they are inconspicuous, open door expenses can be not entirely obvious on the off chance that one isn't cautious. Understanding the potential botched chances inescapable by picking one speculation over another takes into consideration a better dynamic.

The recipe for ascertaining an open door cost is just the distinction between the normal returns of every choice.

Here in the given case, the opportunity cost is

There is no resale value of the project

a company could sell the half-developed project to another property firm for $60m

Opportunity Cost=FO−CO

where: FO=Return on best-foregone optionCO=Return on the chosen option​

Its better to opt out for to sell the half developed project to another property firm since there is no resale value of the projece