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Define opportunity cost, does every business choice have an opportunity cost and give an example of a business practice with an economic cost that is different than its accounting cost

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Define opportunity cost, does every business choice have an opportunity cost and give an example of a business practice with an economic cost that is different than its accounting cost. Give an example of a business practice with an opportunity cost that is different than its monetary cost. And can the opportunity cost of a given resource use be different for different companies and/or be different for the same company at different times.

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Remember - I cannot answer the question directly for you, but I can point you in the right direction.
The good news is that "opportunity cost" is a simple concept and is fundamental to all economics

Excellent article from a good source: http://econlib.org/library/Enc/OpportunityCost.html

The simple concept is that opportunity cost refers to that which you DO NOT do as a direct consequence of what you DO. Both of these concepts must be used together.
Spending $1 on item x means that you do not have that dollar for item y. Simple enough.

Monetary cost is the simplest cost of all - it's just what you spend on something you want.

You can consider a non-monetary cost in terms of time. If you own a business, and you take time to study the written works of major businessmen (like Warren Buffet, say), you can say that you could have ...

Solution Summary

The expert determines if business choices have an opportunity cost. Examples are provided.

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Balance Sheet Analysis

Obtain the latest annual report and accounts of a company of your choice.* Consult the Balance Sheet and determine the company's net asset value.

· What is the composition of the assets, i.e. the relative size of fixed and current assets?
· What is the relative size of intangible fixed and tangible fixed assets?
· What proportion of current assets is accounted for by stocks and debtors?
· What is the company's policy towards asset revaluation?
· What is its depreciation policy?

Now consult the financial press to assess the market value of the equity. This is the current share price times the number of ordinary shares issued. (The notes to the accounts will indicate the number of shares issued.)

· What difference do you find between the net asset value and the market value?
· How can you explain this?
· What is the P:E ratio of your selected company?
· How does this compare with other companies in the same sector?
· How can you explain any differences?
· Do you think your selected company's shares are under- or over-valued?

Notes:
You chosen company MUST have a full listing on the London Stock Exchange.

You MUST attach to your coursework a copy of the latest annual report and accounts of your chosen company. (This does not contribute towards the word count.)

Your coursework should be no less than 1500 words and no more than 2500.
Ratio analysis as well as company valuation methods are required, along with a critical appraisal of the techniques used.

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