An Investor Provides Resources to a Business in Exchange for

question 26

Multiple Choice

An investor provides resources to a business in exchange for

• A) physical resources.
• B) priority of claims in event of liquidation.
• C) an ownership interest in the business.
• D) a promise that the resources will be repaid at a given date.

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Definitions:

Working Capital

The gap between a firm's current assets and its current liabilities, showcasing its short-term financial stability.

Annual Cash Inflow

The total amount of money received by a company over a year, including revenues from sales, investments, and other sources.

Net Present Value

An economic indicator that finds the disparity between cash inflows' present value and the present value of cash outflows during a certain period.

Discount Rate

A rate used to determine the present value of future cash flows; it's often used in discounted cash flow analysis to account for the time value of money.