The Length of Time Required for an Investment to Generate

question 2

Multiple Choice

The length of time required for an investment to generate cash flows sufficient to recover the initial cost of the investment is called the:

• A) Net present value.
• B) Internal rate of return.
• C) Payback period.
• D) Profitability index.
• E) Discounted cash period.

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Definitions:

Coase Theorem

A principle that asserts if trade in an externality is possible and there are no transaction costs, parties can negotiate to solve the problem privately.

Spillover Costs

Costs of production that affect people who have no control over or involvement in the production process, also known as externalities.

Excise Taxes

A tax levied on specific goods or commodities produced or sold within a country, such as alcohol, cigarettes, and gasoline.

Government Intervention

Actions taken by a government to influence or regulate various activities within its economy, such as imposing taxes, subsidies, and regulations.