Which of the following factors is not included when calculating the opportunity costs of investing in a business when using the excess earnings method?
A) Rate of risk-free return.
B) Risk free return
C) An adjustment for inflation.
D) Risk allowance.
E) All of the above are part of opportunity costs.

Question

Quizplus · Accepted Answer

All of the factors listed (rate of risk-free return, risk-free return, adjustment for inflation, and risk allowance) are included in the calculation of opportunity costs when using the excess earnings method. Therefore, there is no factor that is excluded from the calculation.

Which of the Following Factors Is Not Included When Calculating