When Calculating Economic Profit Using the 'Profit Less Capital Charge

question 3

Multiple Choice

When calculating economic profit using the 'profit less capital charge' method, the capital charge is subtracted from the operating profit to give the economic profit. Which of the following describes the type of operating profit that must be used?

• A) The operating profit after interest deduction and before tax deduction
• B) The operating profit before both interest deduction and tax deduction
• C) The operating profit after both interest deduction and tax deduction
• D) The operating profit before interest deduction and after tax deduction

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Definitions:

Asbestos

A group of naturally occurring fibrous minerals used in various industrial and construction materials, known for its durability and resistance to heat, but hazardous to health when inhaled.

Vital Capacity

The maximum amount of air a person can expel from the lungs after a maximum inhalation, a measure of lung function.

Abbreviation

The act or result of reducing a word or phrase to shorter form intended to represent the full form.

Abbreviation

A shortened form of a word or phrase, used to simplify communication.