Explanation

As the compounding frequency increases, the interest earns interest more quickly, resulting in a higher future value.

This means that the investment grows faster and reaches a higher total value over time.

Explanation

Reducing operating expenses increases profit.

Because it means the company is spending less to generate the same amount of revenue, resulting in higher earnings.

Lower expenses lead to higher net income, boosting the bottom line.

Explanation

An increase in initial investment decreases NPV.

As it reduces the present value of the project's cash flows.

This is because the higher initial investment reduces the net benefit of the project.

Explanation

NPV is a time value of money technique that evaluates future cash flows in today's dollars.

This making it a key metric for assessing profitability.

It is also a profitability index.

Explanation

The real interest rate is the interest rate adjusted for inflation.

It representing the actual purchasing power of the interest earned.

Rather than just the nominal value.

Explanation

NPV stands for Net Present Value.

NPV measures the value of cash flows over time.

It adjusted for the time value of money.

Explanation

Explanation

Simple interest is calculated on the principal only.

It does not include compounding.

Explanation

Taxes reduce cash flows, decreasing IRR.

Impact is significant in high-margin projects or high-tax countries.

Explanation

Nominal interest rate: Annual rate without compounding.

It representing yearly interest paid or earned.

It is also known as the annual percentage rate (APR).