Using the EVA,one Should Invest Only If the Increase in Earnings

question 29

Multiple Choice

Using the EVA,one should invest only if the increase in earnings is sufficient to cover the:

• A)net cash flow.
• B)value of the investment in year t.
• C)required rate of return.
• D)value of the investment in year t + 1.

---

Definitions:

Cost of Merchandise Sold

The total expense incurred to purchase or produce the goods that have been sold during a particular period.

Credit Terms

The conditions under which credit is extended by a seller to a buyer, including repayment schedule, interest rates, and due dates.

Discount Period

A set time frame during which a buyer can pay less than the full amount due, usually as incentive for early payment to the seller.

Cash Discount

is a reduction in the invoice price offered by sellers to buyers as an incentive to encourage prompt payment of their accounts payable.