The Minimum Acceptable Expected Rate of Return on a Project

question 74

Multiple Choice

The minimum acceptable expected rate of return on a project of a specific risk is the:

• A) project cost of capital.
• B) company cost of capital.
• C) risk-free rate of return.
• D) project beta times market risk premium.

Understand the concept of gross profit and how it is calculated for different divisions.

Calculate income from operations and understand its significance in business performance evaluation.

Master the concept of service department charges and their impact on divisional profits.

Comprehend the responsibilities and performance evaluation metrics of profit center managers.

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Definitions:

Economic Profits

The difference between a firm's total revenues and its total costs, including both explicit and implicit costs, indicating the firm's profit beyond its opportunity cost.

Equilibrium Level

A state in which economic forces such as supply and demand are balanced, often resulting in stable prices or market conditions.

Output

The sum of all products or services generated by a company, sector, or economic system in a specified timeframe.

Zero Revenues

A situation where a business or organization does not generate any income from its activities or operations.