You plan to analyze the value of a potential investment by calculating the sum of the present values of its expected cash flows.Which of the following would lower the calculated value of the investment?
A) The discount rate decreases.
B) The cash flows are in the form of a deferred annuity, and they total to $100, 000.You learn that the annuity lasts for only 5 rather than 10 years, hence that each payment is for $20, 000 rather than for $10, 000.
C) The discount rate increases.
D) The riskiness of the investment's cash flows decreases.
E) The total amount of cash flows remains the same, but more of the cash flows are received in the earlier years and less are received in the later years.
Correct Answer:
Verified
Q43: S.Treasury bond will pay a lump sum
Q44: A $250, 000 loan is to be
Q45: At the end of 10 years, which
Q46: Which of the following statements regarding a
Q47: A $150, 000 loan is to be
Q49: S.Treasury bond will pay a lump sum
Q50: Of the following investments, which would have
Q51: You plan to analyze the value of
Q52: Which of the following statements is CORRECT,
Q53: Your bank account pays a 5% nominal
Unlock this Answer For Free Now!
View this answer and more for free by performing one of the following actions
Scan the QR code to install the App and get 2 free unlocks
Unlock quizzes for free by uploading documents