Before Fred Started a New Business Venture, He Weighed the Factors

question 31

Multiple Choice

Before Fred started a new business venture, he weighed the factors that could help him succeed as well as the difficulties or setbacks he might face. Which characteristic of a successful entrepreneur is Fred demonstrating?

• A)systems thinking
• B)motivation
• C)discomfort with uncertainty
• D)calculated risk taking

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Definitions:

Internal Rate

Typically refers to the internal rate of return (IRR), which is the discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero.

Discount Rate

A discount rate employed to ascertain the present worth of future cash flows within discounted cash flow analysis.

Net Present Value

The difference between the present value of cash inflows and the present value of cash outflows over a period of time, used in capital budgeting to analyze the profitability of an investment or project.

Operating Assets

Assets used in the day-to-day operations of a business, such as machinery, buildings, and equipment, that contribute to revenue generation.