First-Stage Pro Forma Balance Sheets Do Not Determine

question 43

Multiple Choice

First-stage pro forma balance sheets do not determine:

• A) whether external financing is required.
• B) the need for additional fixed assets.
• C) the amount of the balancing item.
• D)the financing mix for external funding.

---

Definitions:

Net Present Value

A method used in capital budgeting to evaluate the profitability of an investment or project, calculating the difference between the present value of cash inflows and outflows over a period of time.

Present Value

The current worth of a future sum of money or stream of cash flows given a specified rate of return.

Rate of Return

The gain or loss on an investment over a specified period, expressed as a percentage of the investment's initial cost.

Residual Value

The estimated value of an asset at the end of its useful life.