Asked by
Dirce T Pliego
on Dec 11, 2024Verified
What amount must be earned to induce investors to continue to supply the funds necessary to maintain a firm's capital assets?
A) stockholder equity
B) the opportunity cost of capital
C) economic profit
D) accounting profit
Opportunity Cost of Capital
The potential return that is foregone by investing capital in one project rather than an alternative investment.
Stockholder Equity
The residual interest in the assets of a corporation after deducting liabilities, representing the ownership interest of shareholders.
Economic Profit
The difference between total revenue and total costs, including both explicit and implicit costs, indicating the extent to which a firm has exceeded the break-even point.
- Recognize the opportunity cost of capital as a key concept in investment decisions for maintaining a firm's capital assets.
Verified Answer
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Learning Objectives
- Recognize the opportunity cost of capital as a key concept in investment decisions for maintaining a firm's capital assets.