You have determined the profitability of a planned project by finding the present value of all...
You have determined the profitability of a planned project by finding the present value of all the cash flows from that project. Which of the following statements would cause the project to look less appealing in terms of the present value of those cash flows?
|
The discount rate decreases. |
|
|
The cash flows are extended over a shorter longer period of time, but the total amount of the cash flows remains the same. |
|
|
The discount rate remains constant. |
|
|
Answers b and c above |
|
|
None of the above. |
Homework Answers
When the discount rate decreases, the present value of cash flow increases, so it becomes more appealing
If the discount rate remains constant it would make it neither less appealing nor more appealing
However, if the cash flows are extended over a longer period of time with the same amount of cash flows, then the present value will come down as the time value of money makes it less appealing
Answer is The cash flows are extended over a longer period of time, but the total amount of the cash flows remains the same.
Add Answer to:
You have determined the profitability of a planned project by
finding the present value of all...
Question 21 (3.33 points) You have estimated the value of a planned project by finding the...
Question 21 (3.33 points) You have estimated the value of a planned project by finding the net present value (NPV) of all the cash flows from that project. Which of the following changes would cause the project to look more appealing (have a greater NPV)? Lower discount rate Higher discount rate Higher initial cash outflow (project cost) Cash flows are extended over a longer period of time but the total amount stays the same
Question 5 1 pts You are analyzing the value of an investment by calculating the present...
Question 5 1 pts You are analyzing the value of an investment by calculating the present value of its expected cash flows. Which of the following would cause the investment to look worse, i.e. have a lower PV? The riskiness of the project's cash flows decreases. The cost of the investment decreases. The discount rate falls. The discount rate rises,
D. Calculate the profitability index. What is the net present value of a project with a...
D. Calculate the profitability index. What is the net present value of a project with a cost of $100 000 that generates cash flows of $40000 over the next three years, and the required A. $8670 B. $8670 C. $7890 $5210 51 What is the approximate internal rate of return of a project with a cost of $100000 that generates cash flows of $40 000 over the next three ycars? A. 296 B. 5% C.9% D. 1096
The internal rate of return is the discount rate which will equate the present value of...
The internal rate of return is the discount rate which will equate the present value of net cash inflows to the initial cost of investment the liquidation value of the project the salvage value of the project the future value of cash flows none of the above
The net present value method assumes that cash flows are reinvested at the ____. Whereas the...
The net present value method assumes that cash flows are reinvested at the ____. Whereas the internal rate of return method assumes that cash flows are reinvested at the____. discount rate, required rate of return cost of capital, market rate of return firm’s cost of capital, computed internal rate of return marginal cost of capital , discount rate. In terms of the capital budgeting process, the dollar amount of interest charges is always considered in the net cash flow calculation...
If a project costing $73000 has a profitability index of 1 and the discount rate was...
If a project costing $73000 has a profitability index of 1 and the discount rate was 12%, then the present value of the net cash flows was O greater than $73000. undeterminable. $73000. O less than $73000.
All else constant, the net present value of a typical investment project decreases when a. the...
All else constant, the net present value of a typical investment project decreases when a. the discount rate increases b. each cash inflow is delayed by one year c. the initial cost of a project increases d. all cash inflows occur during the last year instead of periodically throughout a project's life. e. more than one of the above is true.
If the discount rate is 9 percent what is the net present value of a project...
If the discount rate is 9
percent what is the net present value of a project with the
following cash flows? Year Cash Flow 0 −$ 55,000 1 21,500 2 24,750
3 29,450
If the discount rate is 9 percent what is the net present value of a project with the following cash flows? Year Cash Flow -$55,000 21,500 24,750 29,450 WN
1. The time value of money refers to the fact that money has an opportunity cost,...
1. The time value of money refers to the fact that money has an opportunity cost, i.e., its reinvestment rate. a. True b. False 2. If the payback period is used as the criterion for assigning priorities to investment projects, the highest priority will be assigned to projects with the shortest payback period. a. True b. False 3. The _______________ is the discount rate that makes the present value of the benefits generated by a project equal to the investment....
yes or no? Generally, the most difficult part of utilizing the net present value concept is:...
yes
or no?
Generally, the most difficult part of utilizing the net present value concept is: determining whether the discount rate used is higher or lower than the internal rate of return. determining the initial cash outflow required to start a project. computing the net present value once the discount rate and cash flows are determined estimating the future cash flows given the initial investment in the project.
Question 21 (3.33 points) You have estimated the value of a planned project by finding the net present value (NPV) of all the cash flows from that project. Which of the following changes would cause the project to look more appealing (have a greater NPV)? Lower discount rate Higher discount rate Higher initial cash outflow (project cost) Cash flows are extended over a longer period of time but the total amount stays the same
Question 5 1 pts You are analyzing the value of an investment by calculating the present value of its expected cash flows. Which of the following would cause the investment to look worse, i.e. have a lower PV? The riskiness of the project's cash flows decreases. The cost of the investment decreases. The discount rate falls. The discount rate rises,
D. Calculate the profitability index. What is the net present value of a project with a cost of $100 000 that generates cash flows of $40000 over the next three years, and the required A. $8670 B. $8670 C. $7890 $5210 51 What is the approximate internal rate of return of a project with a cost of $100000 that generates cash flows of $40 000 over the next three ycars? A. 296 B. 5% C.9% D. 1096
If a project costing $73000 has a profitability index of 1 and the discount rate was 12%, then the present value of the net cash flows was O greater than $73000. undeterminable. $73000. O less than $73000.
If the discount rate is 9
percent what is the net present value of a project with the
following cash flows? Year Cash Flow 0 −$ 55,000 1 21,500 2 24,750
3 29,450
If the discount rate is 9 percent what is the net present value of a project with the following cash flows? Year Cash Flow -$55,000 21,500 24,750 29,450 WN
yes
or no?
Generally, the most difficult part of utilizing the net present value concept is: determining whether the discount rate used is higher or lower than the internal rate of return. determining the initial cash outflow required to start a project. computing the net present value once the discount rate and cash flows are determined estimating the future cash flows given the initial investment in the project.
Most questions answered within 3 hours.
-
Where is the error in this code sequence?
String s1 = "Hello";
String s2 = "ello";...
asked 11 months ago -
Financial data for Joel de Paris, Inc., for last year
follow:
Joel de Paris, Inc.
Balance...
asked 11 months ago -
Consider this reaction:
Al2(SO4)3 (aq)+ BaCl3
(aq) Al2Cl6 (aq)- +
3BaSO4(s) . What is the...
asked 11 months ago -
Suppose that Savneet is considering increasing her
recent random sample from 20 car rentals to 40...
asked 11 months ago -
Trucks arrive at an unloading terminal at an average rate of 120
per hour.
Trucks arrive...
asked 11 months ago -
Why are methanol and ethanol completely soluble in water while
octanol is not very little soluble....
asked 11 months ago -
A facilities manager at a university reads in a research report
that the mean amount of...
asked 11 months ago -
When the CuSO4 is rehydrated by adding water to the anhydrous
compound, is this an endothermic...
asked 11 months ago -
A ray of sunlight is passing from diamond into crown glass; the
angle of incidence is...
asked 11 months ago -
A block of mass 0.249 kg is placed on top of a light, vertical
spring of...
asked 11 months ago -
how do the kidneys compensate in the presences of acidosis
a) trigger hyperventilate
b) reserve acid...
asked 11 months ago -
Question 501 pts
The rental rate of capital to the firm increases. Which of the
following...
asked 11 months ago