The Calculation That Expresses the Ratio of Net Cash Inflows

question 37

Multiple Choice

The calculation that expresses the ratio of net cash inflows to net cash outflows produced by a financial contract is known as:

• A)net present value.
• B)net profit.
• C)internal rate of return.
• D)rate of return.

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Definitions:

Fixed Costs

Expenses that do not change with the level of production or business activity, such as rent, salaries, and insurance.

Unit Variable Cost

The cost associated with producing one additional unit of a product, excluding fixed costs.

Price

Price is the amount of money charged for a product or service, or the sum of values that consumers exchange for the benefits of having or using the product or service.

Break-even Point

The level of production or sales at which total costs match total revenue, resulting in no profit or loss.