The after-tax average cost of the funds used by company in long run is equal to __________?
Correct answer: A. weighted average cost of capital
- A. weighted average cost of capital
- B. economic value added
- C. after-tax operating income
- D. net income
Explanation
The weighted average cost of capital is the after-tax average required return on the company’s long-term sources of finance, weighted according to their proportions. EVA uses this rate as the capital charge.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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