Which is TRUE regarding the trade-off a firm makes when it spends money on an investment project? A. The trade-off a firm faces when using retained earnings or borrowed funds is the same. B. Borrowing money will always be more expensive than using retained earnings. C. Using retained earnings has a higher opportunity cost than does using borrowed money because retained earnings come from past profits. D. The cost of retained earnings is unrelated to the cost of borrowing money.

Question

Darryl Vaughn

Business

29 December, 20:04

Which is TRUE regarding the trade-off a firm makes when it spends money on an investment project? A. The trade-off a firm faces when using retained earnings or borrowed funds is the same. B. Borrowing money will always be more expensive than using retained earnings. C. Using retained earnings has a higher opportunity cost than does using borrowed money because retained earnings come from past profits. D. The cost of retained earnings is unrelated to the cost of borrowing money.

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Trouble · Answer 1

A. The trade-off a firm faces when using retained earnings or borrowed funds is the same.

Explanation:

A trade-off is based on the situational decisions that usually involve the loss of quality and a property that is set or designed to give a return in the other aspects. As one part has to increase and the other has to decrease. The trade-off is commonly expressed as in the terms of opportunity costs which states the loss of the best alternative.