One Reason You May Not Need a Written Contract Is

question 28

Multiple Choice

One reason you may not need a written contract is:

• A) you are dealing with a party you do not know well, so you need to remain flexible.
• B) you are buying land from a member of your family.
• C) the terms of the agreement are simple and the value of the transaction is small.
• D) you have negotiated enough that you both know what the other person intends.

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Definitions:

Cost of Capital

The rate of return a firm needs to generate on its investment initiatives to preserve its market value and appeal to investors.

Cash Flows

The combined total of cash inflows and outflows in a company, significantly impacting its liquid assets.

NPV

Net Present Value (NPV) is a financial metric that calculates the difference between the present value of cash inflows and the present value of cash outflows over a period of time, used in capital budgeting to assess the profitability of an investment.

Cost of Capital

The minimum profit percentage a corporation is required to generate from its investment initiatives to keep its market price stable and draw in financing.