If an Investment Has A(n) ___________ of 1

question 139

Multiple Choice

If an investment has a(n) ___________ of 1.2 it can be said that the investment generates $1.20 in present value benefits for each dollar of invested costs.

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

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Definitions:

Bond Discount

The variance in price between the face value of a bond and the amount it fetches on the market, specifically when sold at a price less than the face value.

Straight-Line Method

A method of calculating depreciation by evenly spreading the cost of an asset over its useful life.

Semiannual Interest

Refers to the payment of interest on a loan or financial instrument every six months.

Bond Premium

The excess value of a bond above its face value in the marketplace.