Which of the Following Statements Is Correct

question 75

Multiple Choice

Which of the following statements is correct?

• A)If you have a series of cash flows, all of which are positive, you can solve for I, where the solution value of I causes the PV of the cash flows to equal the cash flow at Time 0.
• B)To solve for I, one must identify the value of I that causes the PV of the positive CFs to equal the absolute value of the PV of the negative CFs. This is, essentially, a trial-and-error procedure that is easy with a computer or financial calculator but quite difficult otherwise.
• C)If you solve for I and get a negative number, then you must have made a mistake.
• D)If CF₀ is positive and all the other CFs are negative, then you cannot solve for I.

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