For purposes of computing EVA,the minimum desired rate or return on an investment is known as
A)ROI.
B)cost of capital.
C)residual income.
D)profit margin.

Question

Quizplus · Accepted Answer

The cost of capital is the minimum required rate of return that a company must earn on its investments to create value for its shareholders. This is because the cost of capital represents the opportunity cost of investing in a particular business, and any returns that fall below this minimum hurdle rate would be considered unprofitable. Therefore, the cost of capital is a crucial factor in determining a company's economic value added (EVA) and is used as a benchmark against which the company's actual returns are measured.

For Purposes of Computing EVA,the Minimum Desired Rate or Return