The implicit rate of return that must be paid to induce investors to continue to supply the funds necessary to maintain a firm's capital assets is called
A) the investors' rate of return.
B) the opportunity cost of labor.
C) the opportunity cost of capital.
D) equity capital.

Question

Quizplus · Accepted Answer

The opportunity cost of capital is the return that investors forego by investing in a firm rather than in alternative investments with similar risk. It represents the implicit rate of return needed to keep investors supplying capital.

The Implicit Rate of Return That Must Be Paid to Induce