True or false? a. A firm that earns the opportunity cost of capital is earning economic rents.

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True or false?

a. A firm that earns the opportunity cost of capital is earning economic rents.

b. A firm that invests in positive-NPV ventures expects to earn economic rents.

c. Financial managers should try to identify areas where their firms can earn economic rents, because it is there that positive-NPV projects are likely to be found.

d. Economic rent is the equivalent annual cost of operating capital equipment.


Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of...
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Principles of Corporate Finance

ISBN: 978-0077404895

10th Edition

Authors: Richard A. Brealey, Stewart C. Myers, Franklin Allen

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