As the Discount Rate Increases Without Limit,the Present Value of the Future

question 116

Multiple Choice

As the discount rate increases without limit,the present value of the future cash inflows

• A) Gets larger without limit.
• B) Stays unchanged.
• C) Approaches zero.
• D) Gets smaller without limit,i.e. ,approaches minus infinity.
• E) Goes to e^rn.

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Definitions:

Price Discrimination

A pricing strategy where a seller charges different prices for the same product or service to different customers, based on market conditions, customer characteristics, or the nature of the purchase.

Discounts

Reductions on the regular price of goods or services, usually offered to encourage purchases.

Volume Based

A pricing or cost method where charges are dependent on the quantity of units produced or handled.

Forward Buying

The practice of purchasing stock in larger quantities than normal in anticipation of price increases or demand spikes.