Determination of Net Present Value Involves

question 53

Multiple Choice

Determination of net present value involves:

• A) forecasting future profits and cash flows.
• B) discounting future cash flows back to their present value.
• C) analysis on an after-tax basis.
• D) All of the above

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Definitions:

Explicit Costs

Direct payments made to others in the course of running a business, such as wages, rent, and materials.

Total Revenues

The overall amount of money generated by a business from its sales or services before any costs or expenses are deducted.

Normal Rate

The standard or average rate at which something occurs, such as interest rates, inflation, or unemployment rates.

Accounting Profit

The net income of a business as calculated by subtracting total expenses from total revenues, according to standard accounting principles.