It is not useful for comparing projects with different lifespans.
It fails to account for the time value of money.
It can only be used with projects that have positive cash flows.
It can be difficult to interpret and understand.
Which of the following is an example of an operational risk for a company that manufactures automobiles?
A state tax increase that makes buying and registering a car more expensive
Rising interest rates that affect the terms of car loans, thereby decreasing demand
Damage to completed cars held on a storage lot
A national car rental agency backing out of a contract to buy a certain volume of new cars
Jerome needs funding to help start a business selling school supplies. He uses a website that connects him directly with a lender who charges a below-market interest rate.
What type of financing resource is Jerome using?
Trade credit
Peer-to-peer lending
Commercial lending
Factoring