Explicit Costs

question 499

Multiple Choice

Explicit costs

• A)do not require an outlay of money by the firm.
• B)enter into the accountant's measurement of a firm's profit.
• C)enter into the economist's measurement of a firm's profit.
• D)Both b and c are correct.

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Definitions:

Present Value

Today's worth of money or cash flows that are expected to be received in the future, considering a certain rate of profitability.

Compound Interest

The process of calculating interest not only on the principal amount but also on accumulated interest from earlier time frames of a deposit or loan.

Capital Investment

Funds spent by a firm to acquire or upgrade physical assets such as property, industrial buildings, or equipment.

Net Cash Flows

The difference between a company's cash inflows and cash outflows within a specific period.