Economic Rate of Return Is Defined As

question 60

Multiple Choice

Economic rate of return is defined as:

• A) [(C1 + PV1 - PV0 )]/(PV0)
• B) [(C1 - (PV1 - PV0 )]/(PV0)
• C) [(C1 + PV1)]/(PV0)
• D) None of the above

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Definitions:

Target Costing

A pricing strategy in which the selling price and profit margin are used to determine the maximum cost that can be incurred on a product, with the aim of ensuring competitiveness and profitability.

Target Profit

The specific net income a business intends to reach within a designated timeframe.

Price Elasticity of Demand

A measure of how much the quantity demanded of a good responds to a change in the price of that good.

Target Costing

A pricing method that involves determining a product's selling price and then subtracting desired profit to arrive at a target production cost.