ABSTRACT
Another perception of MARR involves opportunity cost. The concept of opportunity cost encapsulates the notion that the “true cost of something” is what is given up (i.e., sacrificed) in order to receive benefit.3 Basically, opportunity cost is the sacrificing of “something in order to get something else.”3 Within the context of opportunity cost, the MARR is the “cost of capital or the opportunity cost of money, that is, the interest that would have been earned on the savings that is foregone by making the investment.”4 Therefore, the MARR value is leveraged to “discount the cash flow of alternatives into equivalent values at a fixed point in time.”4 Similarly, MARR is also defined as the “opportunity cost of capital or an interest rate which reflects the earnings which will be foregone from other investment opportunities if the capital is to be committed to a project in question.”5
