Goods That Are Produced in a Different Year Than They

question 46

Multiple Choice

Goods that are produced in a different year than they are sold are called:

• A) inventory.
• B) output adjustment.
• C) capital depreciation.
• D) a loss.
• E) net national product.

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Definitions:

Salvage Value

Salvage value is the estimated resale value of an asset at the end of its useful life.

Equivalent Annual Annuity

The annual cash flow of an investment that yields the same present value as the investment’s costs, used in capital budgeting to compare the profitability of investments.

Payback

The period of time required for the return on an investment to "pay back" the initial capital outlay.

Cost of Capital

Cost of capital refers to the minimum rate of return a company must earn on its investments to satisfy its investors, creditors, and other providers of capital.