Answer (C) is correct . The margin of safety is the excess of budgeted revenues over breakeven revenues. It is considered in sensitivity analysis.
Answer (A) is incorrect because Residual income is the excess of earnings over an imputed charge for the given investment base.
Answer (B) is incorrect because A marginal rate of return is the return on the next investment.
Answer (D) is incorrect because A target or hurdle rate of return is the required rate of return. It is also known as the discount rate or the opportunity cost of capital.
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