Use the Following to Answer Questions

question 97

Multiple Choice

Use the following to answer questions:
Figure: International Trade 1
-(Figure: International Trade 1) Refer to the figure. According to the figure, which of the following statements is TRUE?

• A) After international trade, price falls by $4 and consumption increases by 4 units.
• B) After international trade, price falls by $4 and consumption decreases by 4 units.
• C) After international trade, price rises by $4 and consumption increases by 8 units.
• D) After international trade, price stays the same and consumption increases by 8 units.

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Definitions:

WACC

A firm's Weighted Average Cost of Capital is derived by calculating the cost of capital for each capital category and then weighting these costs according to each category's presence in the total capital structure.

NPV

Net Present Value (NPV) is a financial metric that calculates the difference between the present value of cash inflows and the present value of cash outflows over a period of time.

Cash Flow

The overall movement of capital entering and leaving a firm, which directly affects its solvency.

IRR

The Internal Rate of Return is a financial measure utilized in the evaluation of capital investments to determine their expected profitability.