A Line Graph Has Two Lines That Draw Dramatically Closer

question 32

Multiple Choice

A line graph has two lines that draw dramatically closer together. Which question will best help explain this finding?

• A) ​What is a good standard range?
• B) ​Does each line increase?
• C) Is there an event or issue that could have caused the change?
• D) ​What years are represented?

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Definitions:

Cost of Capital

The obligatory profit percentage a corporation needs to achieve on its investments to keep its market share and attract investors.

IRR

Internal Rate of Return; a financial metric used to evaluate the profitability of investments, representing the discount rate that makes the net present value (NPV) of all cash flows equal to zero.

Net Cash Flows

The difference between a company's cash inflows and outflows during a specific period, representing its ability to generate value.

Depreciation

The accounting entry allocating the cost of a long-lived asset against income over the asset’s life. Depreciation is a noncash charge, so net income is generally less than true cash flow by at least the amount of depreciation.