Nate and Audrey Are Married and Have Careers in Business

question 127

Multiple Choice

Nate and Audrey are married and have careers in business. If one of the two were to die, there would be a sudden drop in income. To provide protection from this risk the couple should purchase

• A) disability insurance.
• B) life insurance.
• C) health insurance.
• D) car insurance.

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Definitions:

Present Value

The current value of a future amount of money or stream of cash flows given a specified rate of return.

Growth Opportunities

The potential for business expansion, revenue increase, or higher profits due to internal strategies or external conditions in the market.

Free Cash Flow

The amount of cash generated by a company after accounting for capital expenditures, essential for maintaining or expanding the asset base.

Terminal Value

The value of an investment or project at the end of a forecast period, considering all future cash flows as a single lump sum value.