A Rational Person

question 74

Multiple Choice

A rational person:

• A)makes choices based on total benefits and total costs.
• B)makes choices based on added benefits and added costs.
• C)undertakes activities until the net benefits become less than zero.
• D)considers the financial benefits and financial costs of making a choice.

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Definitions:

Purchase Price

The cost paid to acquire a good or service, including initial acquisition costs and any associated transaction fees.

Estimated Useful Life

The expected time period during which an asset is likely to be functional and economically useful.

Internal Rate of Return

A financial metric used to evaluate the profitability of an investment, representing the discount rate that makes the net present value of all cash flows equal to zero.

Net Present Value

The variance between the current value of cash coming in and the current value of cash going out over a time span.