Free Cash Flows Are Adjusted for Risk and the Time

question 52

True/False

Free cash flows are adjusted for risk and the time value of money when used to calculate the value of a venture.

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Definitions:

Profits

The financial gain that is realized when the amount of revenue gained from a business activity exceeds the expenses, costs, and taxes involved in sustaining the activity.

Price Ceiling

A legal maximum price that can be charged for a product or service, often set by government to control costs for consumers.

Price Floor

A government-imposed limit below which prices cannot fall, often set to protect producers.

Rent

A periodic payment made by a tenant to a landlord for the use of land, a building, or other property.