What Is the Break-Even Probability of Collection When the Present

question 48

Multiple Choice

What is the break-even probability of collection when the present value of revenues from a sale is $100,000 and the present value of cost is $87,000?

• A) 1.00
• B) 0.87
• C) 0.74
• D) 0.13

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Definitions:

Annual Cash Flows

The total amount of money being transferred into and out of a business, especially affecting liquidity, over the course of a year.

Required Rate

typically refers to the minimum expected rate of return on an investment, necessary for it to be considered a viable option.

Required Rate

The minimum anticipated return an investor expects to achieve on an investment.

Annual Cash Flows

The net amount of cash and cash equivalents being transferred into and out of a business over a year, reflecting its operational efficiency and financial health.