The Time Expected to Pass Before the Net Cash Flows

question 182

True/False

The time expected to pass before the net cash flows from an investment would return its initial cost is called the amortization period.

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Definitions:

Tax Rate

The percentage at which income or financial transactions are taxed by a government.

Cash Inflows

Money received by a business from its various activities, like sale of goods, services, or obtaining a loan.

Cash Outflows

The movement of money out of a business as expenditures, payments, or investments, which reduce the company's cash balance.

Profitability Index

A calculation that measures the profitability of an investment, determined by dividing the present value of future cash flows by the initial investment cost.