Joint-Stock Companies Turned Out to Be Poor Ways to Finance

question 100

Multiple Choice

Joint-stock companies turned out to be poor ways to finance colonies because

• A) taxes on the profits of such companies were excessive.
• B) new colonies do not immediately return a profit to investors.
• C) the number of people who could invest in such companies was limited by English law.
• D) the English government insisted on controlling day-to-day operations of these companies.

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Definitions:

NPV

Net Present Value, a calculation used to assess the profitability of an investment by discounting future cash flows to their present value.

Cash Flow

The total amount of money being transferred into and out of a business, affecting the company's liquidity, operations, and financial health.

NPV

Net Present Value; a method used in capital budgeting to evaluate the profitability of an investment or project.

IRR

Stands for Internal Rate of Return, a financial metric used to estimate the profitability of potential investments.