Consider the Following Factors Related to an Investment

question 43

Multiple Choice

Consider the following factors related to an investment:
I. The net income from the investment.
II. The cash flows from the investment.
III. The timing of the cash flows from the investment.
Which of the preceding factors would be important considerations in a net-present-value analysis?

• A) I only.
• B) II only.
• C) I and II.
• D) II and III.
• E) I, II, and III.

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Definitions:

Limited Quantities

A restricted amount of a product or resource available for consumption or use.

Perfectly Elastic

Perfectly elastic describes a situation in market demand where consumers will only buy at one price and any deviation from this price leads to zero demand for the good or service.

Economic Profits

The difference between a firm’s total revenue and its total costs, including both explicit and implicit costs.

Exiting

The process of leaving or withdrawing from a particular situation, status, or location, often used in the context of businesses or markets.