Which of the Following Statements Is CORRECT

question 139

Multiple Choice

Which of the following statements is CORRECT?

• A) If you have a series of cash flows, each of which is positive, you can solve for I, where the solution value of I causes the PV of the cash flows to equal the cash flow at Time 0.
• B) If you have a series of cash flows, and CF0 is negative but each of the following CFs is positive, you can solve for I, but only if the sum of the undiscounted cash flows exceeds the cost.
• C) To solve for I, one must identify the value of I that causes the PV of the positive CFs to equal the absolute value of the FV of the negative CFs. It is impossible to find the value of I without a computer or financial calculator.
• D) If you solve for I and get a negative number, then you must have made a mistake.
• E) If CF0 is positive and all the other CFs are negative, then you can still solve for I.

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Definitions:

Responsibility Report

Financial reports that track the performance of segments, departments, or managers within an organization against their budgeted or forecasted figures.

Controllable Fixed Costs

Expenses that remain constant for a given period but can be influenced or managed by decisions of a company's management.

Management Performance Report

Management performance reports are documents or systems that provide key performance indicators and other relevant data to assess, monitor, and enhance the effectiveness and efficiency of management and organizational operations.

Controllable Fixed Costs

Fixed costs that a manager or business has the power to influence or change in the short term.