The Plus Items Below Are "Export-Type" Entries and the Minus

question 15

Multiple Choice

The plus items below are "export-type" entries and the minus items are "import-type" entries in the balance of payments for the hypothetical country of Zippo. $\begin{array}{c}\begin{array}{lll} \text { 1) Goods Exports}\\ \text { 2) Balance on Capital Account}\\ \text { 3) Net Transfers}\\ \text { 4) Imports of Services}\\ \text { 5) Net Investment Income}\\ \text { 6) US Purchases of Assets Abroad}\\ \text { 7) Goods Imports}\\ \text { 8) Foreign Purchases of Assets in the US}\\ \text { 9) Export of Services} \end{array}\begin{array}{r}+\$ 200 \\0 \\0 \\-100 \\0 \\-50 \\-250 \\+150 \\+50 \end{array}\end{array}$
Refer to the given information.The current account items for Zippo are:

• A) 1,2,3,and 4.
• B) 1,3,4,5,7,and 9.
• C) 6 and 8.
• D) 1,2,4,7,and 9.

Explain the concept and calculation of the internal rate of return (IRR).

Understand the reinvestment assumptions implicit in the NPV and IRR methods.

Identify incremental cash flows associated with capital budgeting projects.

Recognize the initial steps and investment requirements in the capital budgeting process.

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Definitions:

Cost-plus Pricing

A pricing strategy where a fixed percentage or a fixed amount is added to the cost price to determine the selling price.

Return on Investment

A measure used to evaluate the efficiency or profitability of an investment, calculated as the net profit divided by the cost of investment.

Markup

The amount added to the cost of a product to cover expenses and generate profit, often expressed as a percentage of the cost.

Absorption Costing

An approach in accounting that involves adding all production-related costs, whether stable or variable, into the product’s final price.