The Effect of the Making of a Partial Payment to Satisfy

question 5

Multiple Choice

The effect of the making of a partial payment to satisfy an admitted debt is an example of the rule that:

• A) past benefits cannot be consideration for a later promise.
• B) a conditional promise may be consideration.
• C) doing what one is already under a legal obligation to do is not consideration.
• D) consideration must be adequate to be binding.

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Definitions:

Net Present Value (NPV)

Net Present Value is used to assess the value of an investment by calculating the difference between the present value of cash inflows and the present value of cash outflows over the investment's lifetime.

Normal Cash Flows

A series of fixed cash flows that occur at regular intervals over a projected period.

Payback Method

A capital budgeting technique that calculates the time required to recoup the cost of an investment, focusing solely on cash flows.

Net Present Value (NPV)

A method used in capital budgeting to evaluate the profitability of an investment or project, by calculating the difference between the present value of cash inflows and outflows over a period of time.