If a Cost Object Such as a Product or Customer

question 4

Multiple Choice

If a cost object such as a product or customer has a positive green margin, then:

• A) its red margin will be positive.
• B) its red margin may be either positive, negative, or zero.
• C) its red margin will be negative.
• D) its red margin will be zero.

---

Definitions:

Discount Rate

Within discounted cash flow analysis, it's the interest rate applied to derive the present value of cash flows expected in the future.

Profitability Index

A financial tool used to measure the relative profitability of an investment, calculated as the present value of future cash flows divided by the initial investment cost.

Cash Inflows

Cash inflows are the money received by a business from its various activities, such as sales revenues, financing, and investments.

Investment Projects

Initiatives undertaken by businesses to invest in assets or activities with the expectation of generating future benefits or returns.