Estimating Future Cash Flows and Discounting Them Back to the Present

question 40

Multiple Choice

Estimating future cash flows and discounting them back to the present is part of which capital budgeting technique?

• A) the future value method
• B) the internal rate of return
• C) the net present value method
• D) the payback method

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Definitions:

Demand Falls

Demand falls occur when there is a decrease in the quantity of a good or service demanded at any given price, often due to changes in consumer preferences, income, or price increases.

Supply Stays

A term that is not typically used in economic contexts; thus, it might not be a real key-term. NO.

Price Ceiling

A legally established maximum price a seller can charge for a product or service to prevent market prices from rising too high.

Equilibrium Price

The equilibrium price is the price at which the quantity of a good or service demanded by consumers matches the quantity supplied by producers, resulting in market balance.