Debt Servicing Refers to the Repayment of Principal on the Debt

question 50

True/False

Debt servicing refers to the repayment of principal on the debt.
Debt service is the interest required to be paid each year on outstanding debt.

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Definitions:

Internal Rate of Return

The specific interest rate at which the sum of all cash flows from a project equals a net present value of zero.

Net Present Value

An assessment that measures the current value of a dollar against its future value, considering the effects of inflation and returns.

Market Rates

The prevailing interest rates available in the marketplace for loans and deposits, set by the dynamics of supply and demand.

Net Present Value

The disparity between the current value of cash coming in and the current value of cash going out over a certain time frame, employed in capital budgeting to evaluate an investment or project's profitability.