Assuming two investments have equal lives, a high discount rate tends to favour [blank].
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 lives

Question

Quizplus · Accepted Answer

A high discount rate means that more value is placed on cash flows that occur earlier in time. Therefore, the investment with large cash flow early will be favored over the investment with large cash flow late or even cash flow.

Assuming Two Investments Have Equal Lives, a High Discount Rate