The Present Value of an Investment's Future Cash Flows Divided

question 33

Multiple Choice

The present value of an investment's future cash flows divided by the initial cost of the investment is called the:

• A)average accounting return.
• B)internal rate of return.
• C)net present value.
• D)profile period.
• E)profitability index.

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Definitions:

Unforeseen Circumstances

Situations or events that could not have been predicted or expected, often leading to disruptions in agreements or plans.

Preexisting Duty Rule

A legal principle stating that an existing contractual obligation cannot serve as consideration for a new contract.

Bilateral Contract

A bilateral contract is a mutually binding agreement in which each party makes a promise to the other, such as a promise to perform a service in exchange for payment.

Illusory Promise

Describes a statement or agreement that appears to be a promise but is too vague or has terms that allow the promisor to avoid any real obligation.