In Calculating the Net Present Value of an Investment in Equipment

question 39

True/False

In calculating the net present value of an investment in equipment, the required investment and its residual value should be subtracted from the present value of all future cash inflows.

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Definitions:

High P/E

Refers to a stock or market with a Price-to-Earnings ratio significantly above the average, often signaling high investor expectations.

Earnings Expectations

Predictions or forecasts about a company’s future earnings, often influencing stock prices and investor behavior prior to the actual earnings announcements.

Stock-price Expectations

Anticipated future prices of stocks based on market analysis, trends, and investor sentiment.

Trin Ratio

A market breadth indicator calculated by dividing the number of advancing stocks by the number of declining stocks, often used to gauge overall market sentiment.