The Best Approach to Convert an Infinite Series of Asset

question 120

Multiple Choice

The best approach to convert an infinite series of asset purchases into a perpetuity is known as the

• A) net working capital approach.
• B) net present value approach.
• C) equivalent annual cost approach.
• D) equivalent annual cash flow approach.

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Definitions:

New York Stock Exchange

One of the largest stock exchanges in the world located at Wall Street, New York, where securities are bought and sold.

Tokyo Stock Exchange

A major stock market exchange in Japan, serving as a hub for the trading of stocks, bonds, and other securities.

Financial Assets

Stocks and bonds. More generally a document giving its owner a claim to certain future cash flows. Stocks base that claim on ownership (equity), while bonds base it on debt. Also called a security.

Future Cash Flows

Projected financial gains or losses for a specific period in the future.