Which of the Following Statements Is CORRECT

question 39

Multiple Choice

Which of the following statements is CORRECT?

• A) If CF₀ is positive and all the other CFs are negative, then you can still solve for I.
• B) If you have a series of cash flows, each of which is positive, you can solve for I, where the solution value of I causes the PV of the cash flows to equal the cash flow at Time 0.
• C) If you have a series of cash flows, and CF₀ is negative but each of the following CFs is positive, you can solve for I, but only if the sum of the undiscounted cash flows exceeds the cost.
• D) To solve for I, one must identify the value of I that causes the PV of the positive CFs to equal the absolute value of the FV of the negative CFs.It is impossible to find the value of I without a computer or financial calculator.
• E) If you solve for I and get a negative number, then you must have made a mistake.

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Definitions:

Net Exports

Net Exports is the value of a country's total exports minus its total imports, representing the net effect of foreign trade on the economy.

Government Purchases

Expenditures by government entities for goods and services that directly consume economic output.

Real GDP

Refers to the total economic output of a country, adjusted for price changes or inflation, measured in constant prices.

Government Purchases

These are expenditures made by government entities for goods and services that directly satisfy public needs or are used to produce other goods and services for public consumption.