Which of the Following Choices Correctly Depicts Whether Discounted Cash

question 19

Multiple Choice

Which of the following choices correctly depicts whether discounted cash flows are used by the method noted when evaluating long-term investments? $$\begin{array} { | l | c | c | c | c | c |c| } \hline & &\begin{array} { c } \text { Net } \\\text { Present Value }\end{array} & \begin{array} { c } \text { Internal Rate } \\\text { of Return }\end{array} & &\begin{array} { c } \text { Accounting } \\\text { Rate of Return }\end{array} \\\hline 1 && \text { No } & \text { No } & &\text { Yes } \\\hline 2 && \text { Yes } & \text { No } & &\text { Yes } \\\hline 3 && \text { Yes } & \text { No } & & \text { No } \\\hline 4 && \text { Yes } & \text { Yes } & & \text { No } \\\hline 5 && \text { Yes } & \text { Yes } & & \text { Yes } \\\hline\end{array}$$

• A)1
• B)2
• C)3
• D)4
• E)5

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Definitions:

Competitive Industry

An industry structure with many firms competing against each other offering similar products or services, leading to lower prices and innovation.

Marginal Revenue

The additional income received from selling one more unit of a good or service; this is crucial for businesses in determining how many units to produce.

Average Revenue

The total revenue generated by a firm divided by the quantity of goods or services sold, indicating the average amount of money made per unit.

Competitive Firms

Enterprises that operate in a market where they have to compete against other firms for the same customers or resources.