FIGURE 3-4
-Refer to Figure 3-4. What does a change from Point A to Point D represent?
Definitions:
Discount Rate
Discount Rate is the interest rate used in discounted cash flow (DCF) analysis to determine the present value of future cash flows.
Mutually Exclusive
Situations or events that cannot occur at the same time; choosing one option excludes the choice of another.
Cash Flows
The total sum of money transfers both incoming and outgoing in a firm, majorly affecting its financial readiness.
Profitability Index (PI)
The present value of an investment’s future cash flows divided by its initial cost; also benefit/cost ratio.
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