The discount rate decreases

Reference no: EM13794953

Select the best answer and why

5. You have estimated the value of a planned project by finding the present value (PV) of all the cash flows from that project. Which of the following would cause the project to look more appealing (have a greater net value)?

a. the discount rate decreases

b. the cash flows are extended over a longer period, but the total dollar amount of the cash flows remains the same

c. the discount rate increases

d. answers (a) and (b) are correct

e. answers (b) and (c) are correct

7. The internal rate of return of a capital investment

a. changes when the cost of capital changes

b. must exceed the project cost of capital to make the investment financially acceptable

c. measures the dollar profitability of a project

d. must be less than the project cost of capital to make the investment financially acceptable

e. measures the length of time it takes a business to recover its initial investment in the project

Reference no: EM13794953

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