The fiNancial Planning Method in Which Accounts Are Varied Depending

question 93

Multiple Choice

The financial planning method in which accounts are varied depending on a firm's predicted sales level is called the:

• A) Percentage of sales approach.
• B) Sales dilution approach.
• C) Sales reconciliation approach.
• D) Common-size approach.
• E) Time-trend approach.

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Definitions:

Initial Cash Outflow

The initial amount of money paid out or expended, typically for an investment or purchase, before any returns are considered.

Required Return

The minimum rate of return an investor expects to achieve by investing in a particular asset or project.

Required Rate

The least yearly interest rate that persuades individuals or entities to dedicate capital to a distinct project or investment opportunity.

Net Present Value

The difference between the present value of cash inflows and the present value of cash outflows over a period of time. It's used in capital budgeting to assess the profitability of an investment or project.