At the same time, as the Chief Operating Officer (COO) of this company, Bennett gave an alternative for machine procurement, in which: 

 Investment in machine purchasing is $1,000,000; 

 Selling price of each unit is $5; 

 Cost of raw material is $2 per unit; 

 Packaging cost is $0.5 per unit; 

 Annual labor cost is $200,000; 

 Annual expenses for machine maintenance is $200,000;
 This machines can be used for 8 years; 

 The salvage value (market value) after 8 years is $25,000.

（5）What is the definition of opportunity cost? Will choosing Bennett’s proposal have an opportunity cost? [5 marks]

Answer rating: 100% (QA)

Opportunity cost can be basically defined as the benefit derived from the ne... View the full answer