Which of the Following Is True About Net Initial Investments

question 88

Multiple Choice

Which of the following is true about net initial investments?

• A)Cash outflows used to purchase plant only.
• B)Cash outflows used to purchase equipment only.
• C)Cash outflows occur at the end of a project's life.
• D)Cash outflows occur at the beginning of a project's life.
• E)Excludes the cash outflows to transport and install equipment.

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Definitions:

Hotelling Rule

An economic theory that addresses how the price of non-renewable resources should increase over time under conditions of efficient extraction and market equilibrium.

Marginal Extraction Cost

The additional cost associated with extracting one more unit of a resource.

Treasury Bill

A short-term government security issued at a discount from the par value and pays no interest, maturing in a year or less.

Treasury Bond

Long-term government debt securities with a fixed interest rate and maturity of more than 10 years.