A Basic Principle of Finance Is That the Value of Any

question 59

Multiple Choice

A basic principle of finance is that the value of any investment is

• A) the present value of all future net cash flows generated by the investment.
• B) the undiscounted sum of all future net cash flows generated by the investment.
• C) unrelated to the future net cash flows generated by the investment.
• D) unrelated to the degree of risk associated with the future net cash flows generated by the investment.

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Definitions:

State Income Taxes

Taxes imposed by individual states on the income earned by individuals and entities within their jurisdiction.

Cash Payment

A transaction where a payment for goods or services is made using physical currency or through a bank transfer.

Direct Method

A way of presenting the cash flow statement where major categories of gross cash receipts and cash payments are disclosed.

Cost of Goods Sold

The total cost of all materials, labor, and overhead used to produce goods sold by a business during an accounting period.