Notes Receivable Typically Arise from Sales to Customers

question 140

True/False

Notes receivable typically arise from sales to customers.Notes receivable typically arise from loans to other entities including affiliated companies;loans to stockholders and employees;and only occasionally from the sale of merchandise or services.

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Definitions:

MIRR

Modified Internal Rate of Return, a financial measure used to evaluate the profitability of investments, adjusting for differences in cash flow timing and reinvestment rates.

Cost of Capital

The rate of return that a company needs to earn on its investment projects to maintain its market value and satisfy its investors and creditors.

Internal Rate of Return

The discount rate at which the net present value of all the cash flows (both positive and negative) from a project or investment equals zero.

Multiple IRRs

The situation where a project has more than one internal rate of return, occurring due to unconventional cash flows.