Which one of these costs accounts for the difference between accounting income and economic value added?
A) Depreciation
B) Cost of capital
C) Taxes
D) Dividends

Question

Quizplus · Accepted Answer

The cost of capital is the cost a company incurs for the funds it acquires to finance its operations. Economic value added (EVA) factors in the cost of capital, while accounting income does not. Therefore, the difference between accounting income and EVA can be attributed to the cost of capital.

Which One of These Costs Accounts for the Difference Between