-In the Above Table, Suppose Investment Decreases by $0

question 79

Multiple Choice

-In the above table, suppose investment decreases by $0.1 trillion. The multiplier equals

• A) 5.0.
• B) 9.0.
• C) 10.0.
• D) None of the above answers are correct.

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Definitions:

Net Present Value

A method used in capital budgeting to assess the profitability of an investment, calculated by subtracting the present value of cash outflows from the present value of cash inflows.

Total Value

The combined market value of all the assets owned by an entity.

Optimal Capital Structure

The best mix of debt and equity financing that minimizes a company's cost of capital and maximizes its stock price.

Debt-Equity Ratio

A financial tool measuring the blend of debt and equity financing a company utilizes for its assets.