You Are Analyzing the Value of a Potential Investment by Calculating

question 100

Multiple Choice

You are analyzing the value of a potential investment by calculating the sum of the present values of its expected cash flows.Which circumstance would lower the calculated value of the investment?

• A)The discount rate increases.
• B)The riskiness of the investment's cash flows decreases.
• C)The total amount of cash flows remains the same, but more of the cash flows are received in the earlier years and less are received in the later years.
• D)The discount rate decreases.

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Definitions:

Diazomethane

A highly reactive organic compound with the formula CH2N2, used especially in chemical synthesis as a methylating agent.

Mechanism

A detailed sequence of steps explaining how reactants are transformed into products in a chemical reaction.

PhCHO

Refers to the chemical compound benzaldehyde, which consists of a benzene ring bonded to an aldehyde group.

PhCOCl

Commonly referred to as benzoyl chloride, it's a compound consisting of a benzene ring attached to a carbonyl chloride group, used in organic synthesis.