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Explain the Difference Between a Frolic and a Detour and How

question 25

Essay

Explain the difference between a frolic and a detour and how they affect or do not affect the principal's liability.


Definitions:

Cash Flows

The total amount of money being transferred in and out of a business, especially as affecting liquidity.

Investment

The expenditure of money with the expectation of achieving a profit or material result by putting it into financial schemes, shares, or property.

Present Value Factors

Multipliers used to determine the present value of future cash flows by accounting for the time value of money.

Future Value Factors

Numerical factors used to calculate the future value of an investment after accounting for interest rates and time periods.

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