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asambeis [7]
3 years ago
12

Which of the following statements is correct?

Business
1 answer:
kherson [118]3 years ago
8 0

Answer:

c. There is an "opportunity cost" associated with using reinvested earnings, hence they are not "free."

Explanation:

When the reinvested earnings are invested that is basically the earnings associated with reinvestment would earn the same like that earned by the investment if not withdrawn and invested.

Let us say for example: Amount invested = $1,000

Return on such investment = $100

Now if such earnings are also reinvested then

Earnings = $110

Now if this $110 is used rather than investing again, then there is the opportunity cost of earning $11 on such reinvestment.

Thus, statement c is correct.

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