Which of the Following Commonly Results in the Financial Failure

question 217

Multiple Choice

Which of the following commonly results in the financial failure of a firm?

• A) diversification
• B) undercapitalization
• C) control of expenses
• D) management of cash flows

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Definitions:

Discount Rate

The interest rate used to discount future cash flows to their present value, assessing the attractiveness of an investment.

Salvage Value

is the estimated resale value of an asset at the end of its useful life, important for depreciation calculations.

Outflow

The movement of money out of a business or financial account, often associated with expenses or investments.

Payback Period

The length of time that it takes for a project to fully recover its initial cost out of the net cash inflows that it generates.