The opportunity cost formula is a simple solution to answer the age old question of whether a particular course of action is worth starting. Opportunity cost is the total sum of what a person or organization has after they compare that sum to what they sacrifice. Opportunity cost is all about the profit a person or organization associates with missed or lost opportunities.Continue Reading
Another way to think about opportunity cost is to see it as a part of a lost contribution margin. A lost contribution margin is revenue, another word for money, minus variable cost. Variable costs come into play as a person or organization has to choose one course of action over another when providing a service or product. People and organizations use the opportunity cost formula to figure out if they have an absolute or comparative advantage over their competition.
The opportunity cost formula is a tool for staying competitive in a market that is not mutually exclusive. It is a useful formula for managing profit loss and figuring out if a course of action sustainable or not. The opportunity cost formula is an important tool for a crucial understanding of benefits and gains from alternative use of resources.Learn more about Economics
The formula for the market value of debt is E((1-(1/(1 + R)^Y))/R) + T/(1 + R)^Y, where E is the annual interest expense, R is the cost of debt, T is the total debt and Y is the average maturity, in years, of the debt. However, calculating the market value of debt can be tricky, because not many firms carry their debt in bond form.Full Answer >
Market opportunity analysis is a form of business planning that incorporates market forecasting techniques and development of a plan that assesses the organization’s financial capability and identifies future opportunities. It gives the company competitive and technological preparedness in exploiting future opportunities, and includes identifying underserved client needs and assessing the company’s resources. It also analyzes the competitive advantages of the business and identifies target markets.Full Answer >
Mixed economies essentially create a balancing act between the private sector and government: these economies allow governments the opportunity to step in to correct market failures, but sometimes draw criticism for enabling too much governmental control. Mixed economies require participation and cooperation between the private sector (such as individual corporations and businesses) and the government. Ideally, these economies create strong, stable economies with minimal governmental interference. However, when the balance tips too far one way or the other, problems arise.Full Answer >
America is considered the land of opportunity among immigrants because the country is able to provide them with a variety of life options that they would not have had in other countries, such as economic stability and educational resources. However, immigrants can have a difficult time achieving their dreams in the "land of opportunity" because they often have language, educational and cultural factors that are obstacles to their success.Full Answer >