The Length of Time Required for an Investment to Generate

question 160

Multiple Choice

The length of time required for an investment to generate cash flows sufficient to recover the initial cost of the investment is called the:

• A) Net present value.
• B) Internal rate of return.
• C) Payback period.
• D) Profitability index.
• E) Discounted cash period.

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Definitions:

Long-run Equilibrium

A state in which all factors of production are fully adjustable, allowing firms to enter or exit the industry, resulting in no economic profit for firms in perfectly competitive markets.

Marginal Cost

The cost addition of manufacturing an extra item of a particular product, emphasizing its role in decision-making for production levels.

Purely Competitive

A market structure characterized by many buyers and sellers, where each seller has little to no influence on the market price.

Long-run Equilibrium

A state in which economic forces such as supply and demand are balanced, and all inputs and outputs in the economy are fully adjusted to these conditions over a long period.