Chips USA is considering the following projects to improve their production process. Chips have a short life,

Question:

Chips USA is considering the following projects to improve their production process. Chips have a short life, so a 3-year horizon is used in evaluation. Which projects should be done if the budget is $70,000? What is the opportunity cost of capital?

First Cost Benefit Project $20.000 30,000 $11.000 14,000 6.000 2,400 13,000 7,000 10,000 5.000 4 25,000 15,000 40.000 21

Opportunity Cost
Opportunity cost is the profit lost when one alternative is selected over another. The Opportunity Cost refers to the expected returns from the second best alternative use of resources that are foregone due to the scarcity of resources such as land,...