An Applicant's Capacity to Repay Its Requested Credit Can Be

question 64

Multiple Choice

An applicant's capacity to repay its requested credit can be found by ________.

• A) analyzing financial statements
• B) checking bank account balances
• C) analyzing tax payment history
• D) checking the covenants

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Definitions:

Discount Rate

The discount rate applied in DCF analysis to calculate the current value of future cash flows.

Net Present Value

The discrepancy between the current worth of incoming cash and the current worth of outgoing cash over a certain timeframe, utilized in the process of capital budgeting to evaluate an investment's profitability.

Required Rate Of Return

The minimum expected return an investor demands for an investment, determining the value of potential investments.

Payback Period

The length of time it takes for an investment to generate an amount of income or cash equivalent to the cost of the investment.