The Contractual Requirement of Consideration Provides That

question 30

Multiple Choice

The contractual requirement of consideration provides that

• A)the contract must be given careful consideration before it is entered into.
• B)the offeror must pay cash for the offeree's promise to perform an act.
• C)an offeree must pay cash for the offeror's promise to perform an act.
• D)each party must give something of value in exchange.
• E)what is exchanged by the parties must be of equal value.

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Definitions:

IOS

Investment opportunity schedule. A schedule of capital budgeting projects arranged in decreasing order of IRR.

WACC

Weighted Average Cost of Capital; it represents a firm's blended cost of capital across all sources, including both debt and equity.

MCC Schedule

Marginal cost of capital schedule. A plot of the WACC (weighted average cost of capital) against the total amount of capital to be raised in a planning period. The MCC rises as more capital is raised and the costs of individual components experience step function increases.

Capital Spending

Refers to funds spent by a business or government on acquiring or maintaining physical assets such as property, plants, and equipment.