24 The likely effect of discounting nominal cash flows with real interest rates will be to: A make an investment's NPV appear less attractive. B make an investment's NPV appear more attractive. C correctly calculate an investment's NPV, regardless of expected inflation. D. correctly calculate an investment's NPV if inflation is expected.
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- You plan to analyze the value of a potential investment by calculating the sum of the present values of its expected cash flows. If the discount rate decreases the it would lower the calculated value of the investment. Group of answer choices True FalseWhich of the following statements correctly describe how the present value of a future expected cash flow may vary with different factors? Group of answer choices A. More than one of the other options are correct. B. As the expected loss of purchasing power due to inflation increases, then, holding all else constant, the present value of a future expected cash flow will decrease. C. As the period of time we have to wait until we receive a future expected cash flow decreases, then, holding all else constant, the present value of the cash flow will decrease. D. As the risk associated with a future expected cash flow increases, then, holding all else constant, the present value of the cash flow will increase.Logan is conducting an economic evaluation under inflation using the then-current approach. If the inflation rate is j and the real time value of money rate is d, which of the following is the interest rate he should use for discounting the cash flows? a. j b. d c. j + d d. j + d + dj.
- 1. The opportunity costs are related with: A) Inflation rate; B) Interest rate; C) Not doing something; 2. People prefer to receive cash: A) Sooner than later; B) Later than sooner; C) Doesn't matter when; 3. Financial decisions must be based on: A) Risk assessment; B) Time adjusted cash flows; C) Inflation assessment; 4. Future vale is equal: A) Initial investment X (1 + k)" ; B) Initial investment X (1+k.n); C) A+B 5. The term (1 + k)" is known as: A) Present value interest factor; B) Future value interest factor; C) Risk assessment factor; 1 (1+ p)" A) Present value interest factor; B) Future value interest factor; C) Risk assessment factor; 6. The term is known as: 7. A present value problem can involve: A) Series of future cash flows; B) Single future cash flow; C) A+B 8. Present value of series of future cash flow is presented in equation: n A) PV = CF₁ t=1 n B) PV = Σ t=1 1 (1+p)" CFt (1+p)" ; C) A+B 9. Cash flows directly attributed to the evaluating projects are known as: A)…Which of the following discounts future cash flows to their present value at the expected rate of return, and compares that to the Initial Investment? A. internal rate of return (IRR) method B. net present value (N PV) C. discounted cash flow model D. future value method1. Explain how interest rate risk works?2. Explain the difference between a positively sloping and inverted (downward sloping) yield curve.3. What is the duration and why do we measure it?
- Current Attempt in Progress If the expected rate of return for the market is not much greater than the risk-free rate of return, what does this suggest about the general level of compensation for bearing systematic risk? B I U T₂ T² Ix E = = 99 3 2. á T Tdont use chatgpt answer The present value of a future amount: a. will always be less than the future amount b. can be calculated precisely if the discount rate and number of periods is known c. is worth less than the future value d. both a. and b. above are trueDiscounting an investment’s cash flows using the internal rate of return will result in which of the following? Group of answer choices net present value of one net present value of zero positive net present value negative net present value
- Which of the following statements is true? Multiple Choice When NPV is 0, the IRR is equal to the discount rate. When NPV is 0, the investment is not making a profit. In calculating IRR, we make the assumption all cash flows are reinvested at the discount rate. NPV is a good measure to use when comparing investments of different sizes.If the inflation rate is positive, the expected NPV of an investment will be: A.understated if real cashflows are discounted by the nominal discount rate. B. understated if nominal cashflows are discounted by the nominal discount rate. C. overstated if the real cashflows are discounted by the nominal discount rate. D. understated if the nominal cashflows are discounted by the real discount rate.At a minimum, which of the following would you need to know to estimate the amount of additional reward you will receive for purchasing a risky asset instead of a risk-free asset? 1. I. Asset's standard deviation 2. II. Asset's beta 3. III. Risk-free rate of return 4. IV. Market risk premium I, III, and IV only I, II, III, and IV I and III only II and IV only III and IV only ооо O