EBK PRINCIPLES OF CORPORATE FINANCE
EBK PRINCIPLES OF CORPORATE FINANCE
12th Edition
ISBN: 9781259358487
Author: BREALEY
Publisher: MCGRAW HILL BOOK COMPANY
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Chapter 11, Problem 15PS

Economic rents* True or false?

  1. a. A firm that earns the opportunity cost of capital is earning economic rents.
  2. b. A firm that invests in positive-NPV ventures expects to earn economic rents.
  3. c. Financial managers should try to identify areas where their firms can earn economic rents, because it is there that positive-NPV projects are likely to be found.
  4. d. Economic rent is the equivalent annual cost of operating capital equipment.
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