A is corrent. The spread is equal to ROI minus the cost of capital. In this case, the spread is equal to 7% because ROI is equal to 15% ($3,000,000 ÷ 20,000,000) and the cost of capital is equal to 8%. Therefore, the spread is equal to 7% (15% – 8%). B is incorrect because the spread is equal to ROI minus the cost of capital. B is incorrect because the spread is equal to ROI minus the cost of capital. D is incorrect because the spread is equal to ROI minus the cost of capital.
