Which One of the Following Is the Primary Determinant of an Investment's

question 5

Multiple Choice

Which one of the following is the primary determinant of an investment's cost of capital?

• A)Life of the investment
• B)Amount of the initial cash outlay
• C)The investment's level of risk
• D)The source of funds used for the investment
• E)The investment's net present value

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Definitions:

Break-Even Time

The period it takes for a business or project to generate enough revenue to cover its initial investment and start making a profit.

Cash Inflows

The movement of money into a business or account, typically from operating activities, financing, and investing.

Discount Rate

The interest rate used to discount future cash flows to their present values in various financial models.

Net Present Value

A calculation that evaluates an investment's profitability by discounting expected future cash flows to their present value and subtracting the initial investment.