At the Current Discount Rate, the Net Present Value of an 8-Year

question 47

Multiple Choice

At the current discount rate, the net present value of an 8-year project is zero.Assuming that the current discount rate and the annual cash flows are unchanged, identify which one of the following statements is true.

• A)The project will be desirable if the project's life is increased to 10 years.
• B)The project will be desirable if the project's life is reduced to 5 years.
• C)The project is equally desirable at 5 and 10 years.
• D)The project is equally undesirable at 5 and 10 years.

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Definitions:

Anticipatory Repudiation

A declaration or action by a party indicating they will not fulfill their contractual obligations, allowing the other party to terminate the contract and seek damages.

Nonbreaching Party

The party in a contractual agreement who has not violated the contract's terms.

Rights

Entitlements or permissions, either legally guaranteed or morally granted, to perform or not perform certain actions.

Contractual Obligations

Duties that parties are legally bound to perform under a contract.