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3. State if each of the following statements are true or false. Justify your answer. A firm that earns the opportunity cost of capital is
3. State if each of the following statements are true or false. Justify your answer.
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A firm that earns the opportunity cost of capital is earning economic rents.
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A firm that invests in positive NPV ventures expects to earn economic rents.
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Financial managers should try to identify areas where their firms can earn economic rents, because they think that positive NPV projects are likely to be found in projects that earn economic rent.
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Economic rent is the equivalent annual cost of operating capital equipment.
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