What term describes the benefits that would be received from the next best alternative use of investment funds?

The term that describes the benefits that would be received from the next best alternative use of investment funds is opportunity cost of funds. Opportunity cost represents the potential gains lost when choosing one investment over another. In finance, understanding opportunity cost is crucial because it helps investors and decision-makers assess the relative value of different investment options. By considering what could have been gained from an alternative use of those funds, businesses can make more informed choices about where to allocate their resources for optimal returns.

Cash outflow refers to the money that is spent or invested, while cash inflow refers to the money that is received or generated. Economic life defines the period during which an asset is expected to be productive or usable. While these terms are relevant to financial analysis, they do not capture the concept of lost potential benefits from forgone alternatives the way opportunity cost does.