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Suppose you are given the following information about Country A:
(A)Calculate Country A's GDP.
(B)Which of the three approaches did you use to calculate GDP? Explain what information you would need to calculate GDP using the other two approaches.
(C)Calculate national saving.
(D)Calculate private saving.
Profitability Index
A calculation that measures the profitability of an investment, determined by dividing the present value of future cash flows by the initial investment cost.
NPV Ranking
A method of evaluating investment opportunities by ranking them based on their Net Present Value, which estimates the present value of future cash flows minus initial investments.
IRR Ranking
The process of ordering investments or projects by their Internal Rate of Return, which estimates profitability.
Discounted Cash Flow
A financial analysis method that estimates the value of an investment based on its expected future cash flows, discounted to their present value.
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