Distinguish between 'explicit cost' and 'implicit cost'.

The cost of capital may be explicit or implicit cost on the basis of its computation. Implicit cost is the cost which is not reported separately as against the explicit cost which represents clear, obvious cash outflows from a business and reduces its bottom-line profitability. Explicit cost is the rate that the firm pays to procure financing. Implicit cost is the opportunity cost associated with the best alternative investment opportunity for the firm and its shareholders that will be forgone if the projects presently under consideration by the firm were accepted.