You Have Determined the Profitability of a Planned Project by Finding

question 66

Multiple Choice

You have determined the profitability of a planned project by finding the present value of all the cash flows form that project.Which of the following would cause the project to look more appealing in terms of the present value of those cash flows?

• A) The discount rate decreases.
• B) The cash flows are extended over a longer period of time,but the total amount of the cash flows remains the same.
• C) The discount rate increases.
• D) Answers b and c above.
• E) Answers a and b above.

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Definitions:

Extreme Forecasts

Predictions about financial markets or economic conditions that significantly deviate from consensus views.

Recent Experience

Refers to the impact of freshly encountered information or events on an individual's decisions or perceptions.

Mean-Variance Efficiency

A concept in portfolio theory that suggests an investment is efficient if it offers the highest expected return for a given level of risk or the lowest risk for a given level of expected return.

Risk-Adjusted Returns

A measure that puts the returns of an investment into perspective by taking into account the level of risk involved in producing those returns.