In Capital Budgeting Computations, Discounted Cash Flow Methods

question 69

Multiple Choice

In capital budgeting computations, discounted cash flow methods:

• A)automatically provide for recovery of initial investment.
• B)can't be used unless cash flows are uniform from year to year.
• C)assume that all cash flows occur at the beginning of a period.
• D)ignore all cash flows after the payback period.

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Definitions:

Monthly Sales

The total amount of sales revenue generated within a calendar month.

Net Operating Income

The total profit of a business after operating expenses are subtracted from gross revenue, but before taxes and interest are deducted.

Variable Expenses Per Unit

Costs that change directly in proportion to changes in production or sales volume, calculated on a per unit basis.

Fixed Expenses

Expenses that remain constant regardless of production volume or sales efforts, like lease payments or wages.