Issues Related to Fairness and Honesty May Arise Because Business

question 33

Multiple Choice

Issues related to fairness and honesty may arise because business is sometimes regarded as a

• A)legal case,where everything must be done to the letter of the law.
• B)contest,with the most ethical firm "winning."
• C)guerilla war where anything goes in the fight for consumers' dollars.
• D)game governed by its own rules rather than those of society.
• E)game governed by the rules of society.

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Definitions:

Capital Rationing

In capital budgeting, the process of allocating available capital among projects to maximize total NPV.

IRR

The Internal Rate of Return; a discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero.

Capital Constraints

Limitations on the amount of capital a company or economy can obtain, often leading to restrictions on growth and investment.

NPV Analysis

Net Present Value Analysis, a method of evaluating the profitability of an investment by calculating the difference between the present value of cash inflows and the present value of cash outflows over a period of time.