When Responsibility Centres Are Established as Revenue Centres, One Way

question 6

True/False

When responsibility centres are established as revenue centres, one way of measuring performance in these centres is to evaluate the return on investment.

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Definitions:

Lump Sum

A single payment made at a particular time, as opposed to multiple payments made over time.

Interest Rate

The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding.

Discount Rate

The interest rate applied within the framework of discounted cash flow analysis to estimate the present value of future cash inflows.

Present Value

The present-day worth of money expected in the future or series of cash flows, calculated using a fixed rate of return.