WGU D076 Finance Skills for Managers OA
PREP
Which scenario correctly describes opportunity cost?
1. Alexandra decides to spend $50 on some new clothes instead of
using that money to pay her electric bill. The opportunity cost is
having the electricity turned off.
2. Donatello has a side business making sculptures in addition to his
regular job. If he spends more time on his side business, the
opportunity cost is the money he makes from selling his sculptures.
,3. Caroline makes $25 an hour. Instead of working one night, she goes
to a concert that costs $50 and lasts two hours. The opportunity cost
of the concert is $50.
4. Buster buys a pizza and with the same amount of money he could
have used to buy a hamburger and fries. There is no opportunity cost
because they cost the same. -Correct Answer ✔ ✔ 1. Alexandra
decides to spend $50 on some new clothes instead of using that
money to pay her electric bill. The opportunity cost is having the
electricity turned off.
Correct! Because she bought new clothes, she did not pay her bills.
UNIT 6
How does management choose between two projects that are
seemingly the same?
,1. Management can analyze the different inherent risks that change
the cost of capital to the firm.
2. If two projects are seemingly the same, it does not matter what
choice management makes.
3. Management can analyze the effect each project will have on the
firm's overall capital structure.
4. As stated in the reinvestment assumption, there cannot be two
projects that are the same. -Correct Answer ✔ ✔ 1. Management
can analyze the different inherent risks that change the cost of capital
to the firm.
, Correct! Each project will have its own inherent risks.
UNIT 6
Which term describes the reduction in sales of a company's own
products due to the introduction of another similar product?
1. Interest cost
2. Sunk costs
3. Opportunity cost
4. Cost of cannibalization -Correct Answer ✔ ✔ 4. Cost of
cannibalization
PREP
Which scenario correctly describes opportunity cost?
1. Alexandra decides to spend $50 on some new clothes instead of
using that money to pay her electric bill. The opportunity cost is
having the electricity turned off.
2. Donatello has a side business making sculptures in addition to his
regular job. If he spends more time on his side business, the
opportunity cost is the money he makes from selling his sculptures.
,3. Caroline makes $25 an hour. Instead of working one night, she goes
to a concert that costs $50 and lasts two hours. The opportunity cost
of the concert is $50.
4. Buster buys a pizza and with the same amount of money he could
have used to buy a hamburger and fries. There is no opportunity cost
because they cost the same. -Correct Answer ✔ ✔ 1. Alexandra
decides to spend $50 on some new clothes instead of using that
money to pay her electric bill. The opportunity cost is having the
electricity turned off.
Correct! Because she bought new clothes, she did not pay her bills.
UNIT 6
How does management choose between two projects that are
seemingly the same?
,1. Management can analyze the different inherent risks that change
the cost of capital to the firm.
2. If two projects are seemingly the same, it does not matter what
choice management makes.
3. Management can analyze the effect each project will have on the
firm's overall capital structure.
4. As stated in the reinvestment assumption, there cannot be two
projects that are the same. -Correct Answer ✔ ✔ 1. Management
can analyze the different inherent risks that change the cost of capital
to the firm.
, Correct! Each project will have its own inherent risks.
UNIT 6
Which term describes the reduction in sales of a company's own
products due to the introduction of another similar product?
1. Interest cost
2. Sunk costs
3. Opportunity cost
4. Cost of cannibalization -Correct Answer ✔ ✔ 4. Cost of
cannibalization
