Which One of the Following Increases the Net Present Value

question 3

Multiple Choice

Which one of the following increases the net present value of a project?

• A)an increase in the required rate of return
• B)an increase in the initial capital requirement
• C)a deferment of some cash inflows until a later year
• D)an increase in the aftertax salvage value of the fixed assets
• E)a reduction in the final cash inflow

Understand the concept and definition of simulation.

Comprehend how Monte Carlo simulation utilizes random numbers.

Recognize the flexibility in simulation with respect to probability distributions.

Identify the advantages and disadvantages of using simulation models.

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Definitions:

Net Income

The total profit of a company after all expenses and taxes have been deducted from total revenues; also known as net earnings or net profit.

Equity

Represents the shareholder's ownership interest in a company, calculated as the difference between total assets and total liabilities.

Debt-Equity Ratio

An evaluation of corporate leverage, calculated by the division of a company's total liabilities by the equity of its shareholders.

Increased

Refers to a situation where there has been a rise in quantity, value, or size of a particular item or variable.