Which of the Following Is Not a Step in the Net

question 2

Multiple Choice

Which of the following is not a step in the net present value approach to capital budgeting?

• A)Identify the amount and timing of each cash flow.
• B)Determine the appropriate discount rate.
• C)Compare the discount rate to the hurdle rate.
• D)Calculate the net present value of the project.

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Definitions:

Price Elastic

An indicator of the responsiveness of the demand for a product to fluctuations in its price.

Substitutable

Describes goods or services that can serve as replacements for each other, fulfilling similar needs or desires for consumers.

Unit-elastic

Unit-elastic refers to a situation in which the percentage change in quantity demanded or supplied is equal to the percentage change in price.

Elasticity

A measure of how much the quantity demanded or supplied of a good changes in response to a change in price.