The Economic Rate of Return on an Asset Is Defined

question 44

Multiple Choice

The economic rate of return on an asset is defined as

• A)[(C1 + PV₁ - PV₀)]/(PV₀).
• B)[(C1 - (PV₁ - PV₀)]/(PV₀).
• C)[(C1 + PV₁)]/(PV₀).
• D)[(C1 + PV₀)]/(PV₁).

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Definitions:

Contribution Margin

The difference between the sales revenue of a company and its variable costs.

Break-even Sales

Break-even sales refer to the amount of revenue required to cover all fixed and variable costs, resulting in zero profit or loss.

Selling Price

The amount of money a buyer pays to acquire a product or service.

Fixed Costs

Expenses that do not change in total regardless of changes in the level of production or sales activities within a certain range.