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An Investment Is Worthwhile If the Sum of the Present

question 54

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An investment is worthwhile if the sum of the present value of benefits exceeds the sum of the present value of costs.


Definitions:

Transfer Prices

Prices charged for goods, services or intangible property transferred within an organization between divisions or subsidiaries.

Decentralized Units

Subsections of an organization that operate semi-independently, making their own decisions and handling their specific operations.

Investment Turnover

A financial ratio that measures the efficiency of a company's investment in its assets by comparing net sales to average total assets.

Operating Income

The profit realized from a business's own operations, calculated before taxes and interest, also known as operating profit.

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