Cash Flow Is Used for a Net Present Value Analysis

question 39

True/False

Cash flow is used for a net present value analysis, while earnings are used for the internal rate of return and payback analysis.
Cash flow is used for all such analyses.

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Definitions:

Cost of Equity

is the return that investors expect for investing in a company's equity, reflecting the compensation for the risk undertaken.

Market Value

The ongoing rate at which one can buy or sell a service or asset in an unregulated market.

Cost of Equity

The rate of return required by a company's shareholders for investing in the company, representing the compensation for the risk undertaken.

Cost of Debt

The actual rate at which a corporation incurs cost on its present liabilities, assessable before or after tax deductions.