Which of the Following Factors Is Least Important to Capital

question 60

Multiple Choice

Which of the following factors is least important to capital budgeting decisions?

• A)The time value of money
• B)The risk-return tradeoff
• C)Brand reputation
• D)Cash flows directly resulting from the decision

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Definitions:

Sinking Fund

A reserve fund established by setting aside revenue over a period of time to fund a future capital expense or repayment of a long-term debt.

New Roof

The process or cost associated with replacing an old roof with a new one, either for repair or upgrade purposes.

Compounded Annually

Interest calculated on the initial principal and the interest accumulated over the previous periods once every year.

Present Value

The amount needed to invest today to reach a stated future goal, given a certain rate of return.