Which of the Following Is TRUE of Discounted Cash Flow

question 5

Multiple Choice

Which of the following is TRUE of discounted cash flow methods like NPV and IRR?

• A) They use simple interest calculations.
• B) They use net income amounts rather than cash flows.
• C) They focus on the payback period.
• D) They incorporate compound interest calculations.

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Definitions:

Monetary Cost

The total amount of money that is spent in order to purchase goods or services.

Resources

Inputs or assets used in the production of goods and services, including labor, capital, and natural materials.

Absolute Advantage

The advantage in the production of a good enjoyed by one country over another when it uses fewer resources to produce that good than the other country does.

Resources

The inputs or factors of production, including land, labor, capital, and entrepreneurship, that are used in the creation of goods and services.