Pig glossary

Opportunity costs

They are the benefits that we do not attain due to the investment of a certain amount of money that could have given us a financial benefit if we had invested it in another place (for instance, placing it in a bank account). As it is an amount of money that we have not gained, it is a cost that we must add to our farm's fixed costs.

For instance, if we have a million euros in a bank acccount at an interest rate of 5%, this money will generate a benefit of 50,000 euros at the end of the year. If we spend that money in order to start a farm, we will not gain these 50,000 euros, so we will have to write them down as opportunity costs.

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