What Is a Capacity Cost?

A capacity cost is a type of sunk cost associated with the decision to add capacity to a business. A capacity cost is incurred when a business expands its operations by adding new facilities, equipment, or personnel. The cost is considered sunk because it has been incurred regardless of whether or not the expansion ultimately … Read more

Original Issue Discount (OID): Formula, Uses, and Examples.

What is the Original Issue Discount (OID)? The Original Issue Discount (OID) is the difference between the market value of a bond and the price at which it is issued. This discount is typically given to bonds that are sold below their face value, and is used to calculate the bond’s interest payments. What is … Read more