Statement I

question 13

Multiple Choice

Statement I.Pollution is an example of a market failure.
Statement II.Mowing your lawn provides an external benefit.

• A)Statement I is true and statement II is false.
• B)Statement II is true and statement I is false.
• C)Both statements are true.
• D)Both statements are false.

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Definitions:

Cash Outflows

Cash Outflows are the amounts of money paid out by a business in a period, including expenses, investments, and loans repayments.

Profitability Index

A calculation used to determine the relative profitability of an investment, computed by dividing the present value of future cash inflows by the initial investment cost.

Payback Technique

A method of evaluating investments by determining the length of time it will take to recoup the original investment amount.

NPV

Net Present Value, a calculation that discounts future cash flows to their present value to evaluate the profitability of an investment or project.