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Nitin Mereddy 16th Oct, 2021
Out-of-pocket costs refer to costs that involve current cash payments to outsiders. On the other hand, book costs, such as depreciation, do not require current cash payments.
Book costs can be converted into out-of-pocket costs by selling the assets and having them on hire. Rent would then replace depreciation and interest. While undertaking expansion, book costs do not come into the picture until the assets are purchased.
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