Which of the Following Is a Disadvantage of Using a Private

question 2

Multiple Choice

Which of the following is a disadvantage of using a private finance initiative?

• A) Private firms are very cost-effective when building infrastructure projects.
• B) Project and budget overruns are usually minimized when the private sector undertakes a
• C) Firms in the private sector can raise funds at a lower rate than the government.
• D) Private providers may become insolvent, leaving the government to finish the project.

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Definitions:

Accrual

The accounting principle that income and expenses are recognized when they are earned or incurred, regardless of when the cash is actually received or paid.

Net Realisable Value

is the estimated selling price of goods in the ordinary course of business minus the estimated costs of completion and the necessary selling expenses, used in inventory valuation and impairment tests.

Depreciation

A method of allocating the cost of a tangible or physical asset over its useful life, recognizing the asset's wear and tear over time.

Asset's Value

The worth of an asset, which can be determined by factors such as market value, book value, or utility.