Under SFAC No

question 8

Multiple Choice

Under SFAC No. 8, which of the following are aspects of relevance?

• A)Comparability and understandability
• B)Timeliness and comparability
• C)Representational faithfulness and decision usefulness
• D)Predictive value and confirmatory value

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Definitions:

Present Value

The contemporary value of money expected to be received in the future or a flow of cash, discounted by a certain rate of return.

IRR

The Internal Rate of Return (IRR) is a financial metric used to estimate the profitability of potential investments by calculating the interest rate at which the net present value of costs (cash outflows) of the investments equals the net present value of the benefits (cash inflows).

Internal Rate of Return

The specific interest rate at which the sum of all cash flows from a project equals a net present value of zero.

Net Present Value

An assessment that measures the current value of a dollar against its future value, considering the effects of inflation and returns.