Under a System of Financial Penalties for Polluters

question 179

Multiple Choice

Under a system of financial penalties for polluters:

• A)Firms could pollute all they wanted to.
• B)Firms would have to pay a tax for each unit of pollution created.
• C)Firms would be encouraged to pollute less.
• D)All of the above are correct.

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Definitions:

Average Rate of Return

A financial ratio that measures the profitability of an investment, calculated as the average annual profit divided by the initial investment cost.

Present Value Method

An approach to evaluate the current worth of a future cash flow, considering a specific rate of interest or cost of capital.

Capital Investment Analysis

The process of assessing the viability, stability, and profitability of long-term investments to determine their potential impact on the financial health of an entity.

Cash Payback Method

A capital budgeting technique that calculates the time needed to recoup the cost of an investment, based on cash inflows.