Discounted Cash Flow Techniques Answer the Question

question 33

Multiple Choice

Discounted cash flow techniques answer the question:

• A)Do the cash returns of the investment exceed the cash outlays?
• B)How does the present value of future benefits from the investment compare to the investment outlay?
• C)How long will it take to recover the original investment outlay?
• D)How much average profit is generated per rand of average investment?

Apply the Lagrangian technique to solve production and cost minimization problems.

Interpret production functions, such as Cobb-Douglas and understand their properties.

Understand the implications of different types of cost functions on marginal costs.

Analyze the effects of input costs on production decisions.

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Definitions:

Market-capitalization Rate

The discount rate derived from the market capitalization of a company, used to determine the present value of its future earnings.

Product Life Cycles

The stages through which goods typically go through from development to withdrawal from the market, including introduction, growth, maturity, and decline.

Required Rate Of Return

This is the minimum annual percentage earned by an investment that will entice individuals or companies to put money into a particular project or investment.

Dividends

Profits distributed by a corporation to its shareholders, often as a share of the company's earnings.