The Opportunity Cost of Capital Is Equal To

question 77

Multiple Choice

The opportunity cost of capital is equal to:

• A) the discount rate that makes the project NPV equal zero.
• B) the return that shareholders could expect by investing their money in the financial markets.
• C) a project's internal rate of return.
• D) the average rate of return for a firm's projects.

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Definitions:

Multiple Regression

A mathematical method that establishes the connection between a dependent variable and multiple independent variables through the application of a linear equation to the collected data.

Estimated Form

A representation of a model or function based on estimated parameters or coefficients.

Independent Variables

Variables in an experiment that are manipulated or controlled by the researcher to investigate their effects on dependent variables.

Numerator

The top number in a fraction that represents the part of the whole that is being considered.