The Expected Cash Flow Approach Encompasses All of the Following

question 36

Multiple Choice

The expected cash flow approach encompasses all of the following features in determining a present value except ________.

• A)the risk-free rate of return
• B)a range of estimated future cash flows
• C)the fair value of the asset or liability
• D)the probabilities of various cash-flow outcomes

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Definitions:

Efficient Output Level

The level of production where the total costs of producing a good or service are minimized while maximizing production.

Profit-Maximizing Price

The price at which a business can sell its product or service to achieve the highest possible profit.

Marginal Cost

The cost added by producing one additional unit of a product or service.

Kink

A sudden change in the rate or direction of a curve or line, often used in economics to describe a sharp change in a demand or supply curve.