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

question 65

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

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Definitions:

Sales Budget

A sales budget is an estimated amount of revenue that a company expects to earn from sales over a specific period.

Master Budget

A master budget is a comprehensive financial planning document that consolidates all of the individual budgets of a company's departments into one single plan for a specific period.

Financial Budgets

Plans that project an organization's income, expenditures, and capital needs over a specific period, guiding its financial operations and goals.

Operating Budgets

Financial plans that outline the projected revenue, expenses, and profit for the operations of a business within a specific period.