Identify the Stages of the Business Cycle and List One

question 16

Essay

Identify the stages of the business cycle and list one or two characteristics of each stage.

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Definitions:

Sunk Cost

Expenses that have already been incurred and cannot be recovered, and should not influence future business decisions.

Operating Cash Flow

The cash generated by a company's normal business operations, indicating whether a company can maintain or grow its operations without external financing.

Capital Cost Allowance

A tax deduction in some jurisdictions that allows businesses to depreciate the cost of tangible and intangible assets over time.

Weighted Average Cost of Capital (WACC)

The average rate of return a company is expected to pay to its security holders to finance its assets, weighted by the proportion of equity and debt in the company’s capital structure.