Investment in Human Capital

question 124

Multiple Choice

Investment in human capital

• A) is quite different from and has a much lower return than investment in physical capital.
• B) is just like investment in physical capital and has a return similar to that earned from other investments.
• C) is just like investment in physical capital but has a much greater return than do other investments.
• D) is not comparable to other investments in any way since human capital is embodied in the person.

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Definitions:

Operating Income

Earnings before interest and taxes (EBIT), representing the profit a company generates from its core operations.

Income Tax Expense

The amount of money that an individual or corporation owes to the government based on their taxable income.

Effective Income Tax Rate

The average rate at which an individual or corporation is taxed, calculated by dividing the total tax expense by the taxable income.

Cash Dividends

Payments made by a corporation to its shareholders as a distribution of profits, typically in the form of cash.