_____Refers to the Consistency of Results and __________Is the Extent

question 38

Multiple Choice

_____refers to the consistency of results and __________is the extent to which you are measuring what you think you are measuring.

• A) Reliability; periodicity
• B) Validity; reliability
• C) Reliability; validity
• D) Convergence; divergence

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Definitions:

WACC

The Weighted Average Cost of Capital represents the average cost of a company's financing (debt and equity), where each form of capital is weighted according to its proportion in the overall financing mix.

NPV

Net Present Value; a method used in capital budgeting to assess the profitability of an investment or project, calculated by discounting future cash flows to their present value and subtracting the initial investment.

IRR

The Internal Rate of Return, a financial metric used to evaluate the profitability of potential investments, calculated as the discount rate that makes the net present value of all cash flows equal to zero.

NPV Profiles

Graphs that show the relationship between a project's NPV and various discount rates, used to analyze the sensitivity of a project's value to changes in the cost of capital.