Which of the Following Is the Required Rate of Return

question 147

Multiple Choice

Which of the following is the required rate of return used in the economic value added (EVA) calculation?

• A) The ROI of the division or company being evaluated
• B) After-tax weighted-average cost of capital
• C) The residual income/total assets
• D) The after-tax operating income/(Total assets - current liabilities)

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Definitions:

Positively Correlated

A relationship between two variables where both either increase or decrease together.

Portfolio

A conglomerate of monetary investments incorporating shares, debentures, material goods, cash on hand, and assets akin to cash, inclusive of mutual funds and ETFs.

Mean

The average of a set of numbers, calculated by dividing the sum of all numbers by the count of numbers.

Investment

The allocation of resources, usually financial, in expectation of generating an income or profit.