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Describe How the Power of Incumbency Works

question 64

Essay

Describe how the power of incumbency works. Also, explain the advantages that incumbents have that can aid their reelection.


Definitions:

Hurdle Rate

The minimum acceptable rate of return on an investment that a manager or investor expects to achieve.

Time Value of Money

The idea that having money in the present is more valuable than having the same sum in the future because of what it could potentially earn.

Break-Even Time

The period it takes for a business or project to recover its costs, reaching a financial break-even point.

Payback Period

The payback period is the time it takes for an investment to generate cash flows sufficient to recover its initial cost.

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