Answered: The appropriate benchmark for the…

The appropriate benchmark for the return on equity is: A)the weighted average cost of capital. B)the cost of equity. C)the interest free rate. D)none of the above.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

The appropriate benchmark for the return on equity is:

A)the weighted average cost of capital.

B)the cost of equity.

C)the interest free rate.

D)none of the above.

Definition Definition Amount of return a company generally pays to its equity investors. The cost of equity represents the compensation required by the market in lieu of owning the asset firm and simultaneously bearing the risk of ownership.

Expert Solution

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Total earning of the firm that is held in the hands of shareholders of the company.

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