When the costs of an investment come before that investment's benefits, what will be the effect of a rise in interest ra...
When the costs of an investment come before that investment's benefits, what will be the effect of a rise in interest rates on the attractiveness of that investment to potential investors?
| a. |
It will make it more attractive, since it will increase the investment's net present value (NPV). |
|
| b. |
It will make it less attractive, since it will increase the investment's net present value (NPV). |
|
| c. |
A rise in interest rates will likely have no effect on the attractiveness of this investment to potential investors. |
|
| d. |
It will make it less attractive, since it will decrease the investment's net present value (NPV). |
|
| e. |
It will make it more attractive, since it will decrease the investment's net present value (NPV). |
Homework Answers
The correct answer is:-
d) It will make it less attractive since it will decrease the investment's net present value (NPV).
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