When the Costs of an Investment Come Before That Investment's

question 70

Multiple Choice

When the costs of an investment come before that investment's benefits,what will be the the effect of a rise in interest rates on the attractiveness of that investment to potential investors?

• A)It will make it more attractive,since it will increase the investment's net present value (NPV).
• B)It will make it more attractive,since it will decrease the investment's net present value (NPV).
• C)It will make it less attractive,since it will increase the investment's net present value (NPV).
• D)It will make it less attractive,since it will decrease the investment's net present value (NPV).
• E)It will be unchanged,since NPV calculations ignore changes in interest rates to more accurately compare the NPVs of projects beginning at different times.

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Definitions:

Concrete Step

A specific, actionable measure taken to achieve a particular goal or to implement a plan.

Financial Compensation

Payment provided to someone in exchange for an injury, loss, or the performance of a service or job.

Freedom Petitions

Arguments for liberty presented to New England’s courts and legislatures in the early 1770s by enslaved African-Americans.

Enslaved African-Americans

Individuals of African descent who were forcibly brought to the United States and subjected to forced labor and servitude until the abolition of slavery.