The Net Present Value for a Project with a Relatively

question 36

Multiple Choice

The net present value for a project with a relatively long life is more sensitive to changes in the required rate of return than the net present value for a project with a relatively short life because:

• A)the internal rate of return is greater the longer the term of a project.
• B)interest is compounded over time.
• C)a change in the discount rate has a much greater impact on more distant cash flows.
• D)distant cash flows are more uncertain.

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Definitions:

Federal Lands

These are lands owned by the federal government of a country, often used for various purposes such as parks, reserves, or military bases.

Western Timber

Refers to the forests and lumber resources found in the western region of the United States, crucial for the country’s construction and paper industries.

California Gold Rush

A period of rapid migration to California following the discovery of gold in 1848, significantly impacting the state's demographics and economy.

Timothy Flint

An American author and missionary (1780–1840), known for his works on the American frontier and his contributions to Western literature.