The implicit cost of capital is:

Question

Quizplus · Accepted Answer

The implicit cost of capital is the opportunity cost of using capital in a certain way, such as investing in a particular project or business. It represents the return that could have been earned if the capital had been invested elsewhere. Thus, it is a relevant cost in determining economic profit as it reflects the true cost of using the capital. A and B are incorrect because they refer to explicit costs of using capital rather than the opportunity cost. D is incorrect because the implicit cost of capital is important in determining economic profit.

The Implicit Cost of Capital Is