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Costs of a business: interest, dividends, opportunity, tax

Finance costs: tangible cost, interest, dividends; opportunity costs - loss of alternative projects using retained earnings; tax effects.

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The first definition of a cost is the price paid for a product or service. Beyond that, costs can be non-monetary including sacrifices, losses or penalties. Examples might include the cost to one's health for doing a certain type of job. The term 'cost' is also used in financial planning and forecasting to estimate or evaluate a future situation.

In the business world, costs can be defined as:

Interest Cost: The price paid in interest for using money from a lender rather than company capital.

Tangible costs are those that are quantifiable and can be traced to a product or as a direct cost or expense of performance.

Intangible costs are often not quantifiable such as customer goodwill mentioned in the link following. They are real costs, but ...

Solution Summary

The loss of alternative projects using retained earnings and tax effects are provided. The 475 word solution presents a comprehensive discussion of costs in a business.