Assuming That Their NPVs Based on the Firm's Cost of Capital

question 42

True/False

Assuming that their NPVs based on the firm's cost of capital are equal, the NPV of a project whose cash flows accrue relatively rapidly will be more sensitive to changes in the discount rate than the NPV of a project whose cash flows come in later in its life.

---

Definitions:

Moral Reasoning

The process through which individuals make decisions about what is right or wrong, based on ethical principles.

Cognitive Development

Development involving the ways that growth and change in intellectual capabilities influence a person’s behavior.

Young Adulthood

A stage of human development that occurs approximately from the late teens through the late twenties, highlighting significant transitions in personal, social, and professional domains.

Middle Childhood

A stage of human development that typically covers the early school years from ages 6 to 12, marked by significant growth in social, cognitive, and physical areas.