Which of the following scenarios is most desirable for the FI?
A)The initial set-up and development costs are lower than the sum of the discounted present values of cash flows from selling the product.
B)The initial set-up and development costs exceed the sum of the discounted present values of cash flows from selling the product.
C)The initial set-up and development costs equal the sum of the discounted present values of cash flows from selling the product.
D)The most desirable scenario depends on the FI's individual situation.

Question

Quizplus · Accepted Answer

In this scenario, the initial set-up and development costs are lower than the sum of the discounted present values of cash flows from selling the product, which means that the product is expected to generate positive net cash flows for the FI. This is the most desirable scenario for the FI as it indicates profitability and positive return on investment.

Which of the Following Scenarios Is Most Desirable for the FI