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AAHAM CRCS Professional Practice Exam

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A company can use a vacant warehouse for either a new fabrication shop or lease it to another firm for $90,000 per year. If it chooses the fabrication shop, what is the $90,000 best described as?
Correct Answer:
Opportunity cost
Explanation:
Opportunity cost is the benefit forgone by selecting one alternative instead of the best available alternative—in this case, the lost rental income.

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