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TOPIC: Opportunity Cost

Opportunity Cost 7 years 11 months ago #408

  • Rene Plattner
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Hello! I am studying since a couple of weeks on the PMBOK and PMP Exam Prep from Rita Mulcahy.

In her book on page 110 there is a small chapter about Opportunity cost.

There is an example:

Question: You have two projects to choose from: Project A with a NPB of $45k
or project B with a NPV of $85k. What is the opportunity cpsz pg slecting project
B?

My thought was:
45k - 85k = 40K

The Anser in Ritas book says: 45k

Can you help me to understand that?

Thanks, René!

Re:Opportunity Cost 7 years 11 months ago #409

  • Rene Plattner
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Sorry there was a little typo:
Project A with a NPV of $45K (not NPB)

Re:Opportunity Cost 7 years 11 months ago #411

  • Cornelius Fichtner
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René,

Please watch Episode E07.05 Advanced Cost Theory where we explain this.

But let me ask the question in another way: You have an apple and an orange. You eat the orange. What did you not eat (what is your lost "eating opportunity")?

No subtraction needed.
Until Next Time,
Cornelius Fichtner, PMP, CSM
President, OSP International LLC

Re:Opportunity Cost 7 years 11 months ago #422

  • Rene Plattner
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Hi Cornelius!
Great example! Thanks a lot for this! At the moment I am on episode 4.06 and on Ritas book in chapter 4. But I was now listening to your episode E07.05 and after listening to your example with the chairs as well as the example with the apple and orange I am completely clear!!! Thanks a lot!

My aim is to finish your prepcast and Ritas book within the next 5-6 weeks. Then I would like to repeat 1 more time and spend some weeks on your brand new 10weeks self-study coaching course.
I then want to become a PMP latest in december :-)

Nice regards and all the best, René!
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