The Constant Annuity Payment Over the Life of a Project

question 64

Multiple Choice

The constant annuity payment over the life of a project that is equivalent to receiving the NPV today is the:

• A)annualized annuity.
• B)independent annual benefit.
• C)equivalent annual profitability.
• D)equivalent annual benefit.

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Definitions:

Laffer Curve

A curve illustrating the relationship between the tax rate and tax revenues. Tax revenues will be low at both very high and very low tax rates. When tax rates are quite high, lowering them can increase tax revenue.

Tax Revenues

The income that is gained by governments through taxation.

Marginal Tax Rates

The rate of tax that applies to the next dollar of taxable income above a pre-determined threshold.

Excise Tax

A tax levied on specific goods, services, and activities, often included in the price of products like gasoline, tobacco, and alcohol.