Which of the Following Is Correct with Respect to Sole

question 3

Multiple Choice

Which of the following is correct with respect to sole proprietorships?

• A) The sole proprietor has unlimited liability.
• B) Sole proprietorship exists where two or more people carry on business together with a view towards profits.
• C) The sole proprietor has limited liability.
• D) A sole proprietorship must be incorporated.
• E) The sole proprietorship is a separate legal entity.

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Definitions:

Net Present Value

The difference between the present value of cash inflows and outflows over a period, used to analyze the profitability of an investment.

Projected Annual Cash Inflow

An estimate of the total money expected to be received by a company over a year from its operational activities.

Net Present Value

Net present value (NPV) is a financial calculation used to assess the profitability of an investment or project, by discounting all expected future cash flows to their present value using a specific discount rate.

Payback Period

The time it takes for an investment to generate enough cash flow to recover its initial cost, used in capital budgeting to evaluate investment efficiency.