When Calculating Economic Profit Using the 'Profit Less Capital Charge

Multiple Choice

When calculating economic profit using the 'profit less capital charge' method, the capital charge is subtracted from the operating profit to give the economic profit. Which of the following describes the type of operating profit that must be used?

A) The operating profit after interest deduction and before tax deduction
B) The operating profit before both interest deduction and tax deduction
C) The operating profit after both interest deduction and tax deduction
D) The operating profit before interest deduction and after tax deduction