Tara Owns a Shoe Store and a Bookstore

question 46

Multiple Choice

Tara owns a shoe store and a bookstore. Both businesses are operated in a mall. She also owns a restaurant across the street and a jewelry store several blocks away.

• A) All four businesses can be treated as a single activity if Tara elects to do so.
• B) Only the shoe store and bookstore can be treated as a single activity, the restaurant must be treated as a separate activity, and the jewelry store must be treated as a separate activity.
• C) The shoe store, bookstore, and restaurant can be treated as a single activity, and the jewelry store must be treated as a separate activity.
• D) All four businesses must be treated as separate activities.
• E) None of the above.

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Definitions:

Net Present Value

A valuation method that calculates the present worth of cash flows by discounting future cash flows to their present value.

Average Rate

In finance, it typically refers to the mean rate of return or interest rate over a specific period. It can also mean the average exchange rate over a period for currency conversion.

Capital Investment

Funds invested in a business with the expectation of future benefits, such as acquiring new equipment, buildings, or other resources to generate income.

Net Present Value

A method used to evaluate the profitability of an investment by calculating the difference between the present value of cash inflows and outflows over a period of time.