Net Present Value Is the Difference Between the

question 146

Multiple Choice

Net present value is the difference between the

• A) future cash inflows and the capital investment.
• B) future cash inflows and the present value of the capital investment.
• C) present value of future cash inflows and the capital investment.
• D) present value of future net income and the capital investment.

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Definitions:

Break-even Sales

The amount of revenue from sales that equals the total of variable and fixed costs, with no profit or loss.

Variable Cost

Variable costs are expenses that change directly and proportionally with the level of production or business activity, such as materials and labor costs.

Wage Contract

A formal agreement between an employer and an employee or labor union that outlines the terms of employment, wages, and conditions.

Margin of Safety

The difference between actual or expected sales and the break-even point, indicating the amount of sales that can decline before a firm incurs a loss.