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:

Money Markets

Sections of the financial market where short-term financial instruments and securities are traded, helping firms and governments manage liquidity.

Capital Markets

Financial markets where long-term debt or equity-backed securities are bought and sold, providing businesses and governments with a platform to raise funds.

Corporate Debt

Borrowed money that a company owes to creditors, which can be in the form of bonds, loans, or other debt instruments.

Financial Intermediation

The process by which financial institutions such as banks mediate or stand between savers and borrowers to facilitate financial transactions.