​Which of the Following Will Be the Same Amount Regardless

question 63

Multiple Choice

​Which of the following will be the same amount regardless of the cost flow assumption adopted?

• A) ​number of items ordered
• B) ​gross profit
• C) ​cost of goods sold
• D) ​ending merchandise inventory

Know how to compute geometric and arithmetic average returns.

Understand the concept of the real rate of return and its importance in financial analysis.

Be able to identify and calculate the risk premium on various investment types.

Apply concepts of annual coupon and bond pricing in investment return calculations.

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Definitions:

Opportunity Costs

The potential benefits missed out on when choosing one alternative over another.

IRR

The Internal Rate of Return is a financial metric used to estimate the profitability of potential investments, calculated as the rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero.

NPV

Net Present Value; a financial metric used to evaluate the profitability of an investment, calculated by subtracting the initial investment from the present value of cash inflows.

AAR

Average Annual Return; calculating the mean annual return of an investment over a specified time period.