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Opportunity and Incremental Cost: Attempt to Define in Systems Terms: A Comment.

The Accounting Review 1974 49(1), 118-123

Reviews the definitions and uses of incremental cost and opportunity cost in several leading economics and accounting texts. Concept of incremental cost; Confusion involved in the use of opportunity cost concept in accounting; Example of usage of the incremental cost concept and opportunity cost concept; Conclusions.

On Costs of Capital in Programming Approaches to Capital Budgeting

Louis H. Ederington; William R. Henry

Journal of Financial and Quantitative Analysis 1979 14(5), 1049

This paper is concerned with costs of capital in mathematical programming formulations of the problem of capital budgeting under capital rationing. It shows that there is a serious error in the method outlined by previous authors for converting the shadow prices from the solution of the dual into measures of the firm's marginal internal opportunity rates. In addition to demonstrating that the traditional approach leads to erroneous and nonsensical results, this paper presents a correct procedure for determining these rates.

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Opportunity and Incremental Cost: Attempt to Define in Systems Terms: A Comment.

On Costs of Capital in Programming Approaches to Capital Budgeting