If the Average Price of an Automobile Increased from $7,000

question 91

Multiple Choice

If the average price of an automobile increased from $7,000 to $8,000 from 1979 to 1980,then we know that:

• A)the real price of automobiles must have increased.
• B)the absolute price of automobiles increased but its real price declined.
• C)the absolute price of automobiles increased but we do not have enough information to say what happened to its real price.
• D)the demand for automobiles increased during that period.

Understand the differences between equity and debt financing and their implications for small business owners.

Grasp the concept of undercapitalization and its effects on the survival of a business.

Comprehend the growth management strategies for small businesses, including delegation of authority.

Explain the importance of innovation and customer focus in the success of small businesses.

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Definitions:

Internal Rate of Return

A metric used in capital budgeting to estimate the profitability of potential investments, represented as the discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero.

Net Present Value

A valuation method that calculates the present value of expected future cash flows minus the initial investment cost.

Capital Investment Project

A project requiring significant amounts of capital for the purchase, improvement, or maintenance of long-term assets to generate future benefits.

Cash Flows

The sum total of currency transactions inbound and outbound in a firm, markedly affecting its cash-on-hand.