Which One of the Following Will Increase the Future Value

question 4

Multiple Choice

Which one of the following will increase the future value of a stream of unequal payments for a ten year project? The rate of return is positive.

• A) Delaying some cash inflows from years 1 and 2 until year 9.
• B) Lowering the discount rate applicable to all ten years.
• C) Increasing the initial cash outflow to start the project.
• D) Moving more of the cash inflows to the earlier years of the project.
• E) Lowering the effective annual rate applicable to the project.

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Definitions:

Gross Investment

The total expenditure on new capital assets plus the replacement of depreciated assets within an economy in a specific time period.

Net Domestic Product

The aggregate worth of every product and service generated inside a nation over a particular timeframe, deducting depreciation.

Gross Domestic Product

The total market value of all final goods and services produced within a country in a specific time period, indicating economic health.

Depreciation

Depreciation is the accounting process of allocating the cost of tangible assets over their useful lives, reflecting wear and tear or obsolescence.