Which Three of the Following Would You Need to Know

question 3

Multiple Choice

Which three of the following would you need to know when calculating the net present value of a five year project?

• A) The initial cash flow
• B) The cash flow in year 1
• C) The opportunity cost of capital
• D) The real rate of return

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Definitions:

Partnership Earnings

The share of profits or losses generated by a partnership that is allocated to each partner according to their agreement.

Federal Income Tax

A tax levied by the federal government on the annual earnings of individuals, corporations, trusts, and other legal entities.

Incoming Partner

A new member joining a partnership, bringing capital to the business in exchange for a share of the partnership's profits and losses.

Initial Investment

The amount of money used to start a project, purchase an asset, or invest in a business for the first time.