Competitive Advantage

question 4

Multiple Choice

Competitive advantage

• A)exists only when an industry is in long term equilibrium.
• B)emerges from external and internal sources.
• C)both a and b.
• D)neither a nor b.

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Definitions:

Internal Rate Of Return

A measure employed in evaluating financial returns to gauge the potential profitability of investments.

Discount Rate

The interest rate used to discount future cash flows to their present value, reflecting the time value of money and risk.

Profitability Index (PI)

The profitability index is a calculation used to assess the relative profitability of an investment, based on its present value of future cash flows per unit of investment.

Profitability Index (PI)

A calculation that relates the benefits of an investment project to its costs, often used to compare the attractiveness of different projects.