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 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.
B) The discount rate increases.
C) The riskiness of the investment's cash flows decreases.
D) 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.
E) The discount rate decreases.
Answers (1)
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “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 ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers
You Might be Interested in
Luther Industries currently has 5 million shares outstanding and its stock is currently trading at $40 per share. Assuming Luther issues a 5:2 stock split, then Luther's new share price is closest to:
Answers (1)
Jeff Richards works for an American MNC. For more than 10 years, Jeff was posted in the company's subsidiary in Ghana.
Answers (1)
List 3 staple convenience goods that you or someone you know buys on a regular basis?
Answers (1)
A manufacturer of tiling grout has supplied the following dа ta: Kilograms produced and sold 420,000 Sales revenue $ 1,890,000 Variable manufacturing expense $ 948,000 Fixed manufacturing expense $ 242,000 Variable selling and administrative
Answers (1)
In a small, closed economy, national income (GDP) is $350.00 million for the current quarter. Individuals have spent $100.00 million on the consumption of goods and services. They have paid a total of $60.
Answers (1)
New Questions in Business
How do compliments and substitutes affect demand?
Answers (1)
Non-trade receivables should be reported separately from trade receivables. Why is this statement either true or false? A) It is true because trade receivables are current assets and non-trade receivables are long term.
Answers (1)
In general, a visionary organization asks what three types of questions to specify its foundation, set a direction, and formulate strategies? why, when, where what, by whom, how why, what, how how, when, where who, why, when
Answers (1)
The United States wanted overseas territories because the territories had A) access to ports. B) customers who would buy U. S. products. C) connections with European nations. D) access to raw materials.
Answers (1)
On January 1, Puckett Company paid $1.71 million for 57,000 shares of Harrison's voting common stock, which represents a 40 percent investment. No allocation to goodwill or other specific account was made.
Answers (1)