Assuming two investments have equal periods,a high discount rate tends to favour
A)the investment with large cash flow early.
B)the investment with large cash flow late.
C)the investment with even cash flow.
D)neither investment since they have equal periods.

Question

Quizplus · Accepted Answer

A high discount rate means that future cash flows are worth less in today's terms. Therefore, an investment with large cash flow early will be worth more than an investment with large cash flow late, as the early cash flow can be reinvested sooner and achieve a higher return.

Assuming Two Investments Have Equal Periods,a High Discount Rate Tends