When calculating an i* value, all net positive cash flows are assumed to be reinvested at:a. the current market interest rate.b. the i* rate.c. the company’s MARR.d. the company’s cost of capital.

When calculating an i* value, all net positive cash flows are assumed to be reinvested at:a. the current market interest rate.b. the i* rate.c. the company’s MARR.d. the company’s cost of capital.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 12MC: Which of the following does nor assign a value to a business opportunity using time-value...

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Question

When calculating an i* value, all net positive cash flows are assumed to be reinvested at:
a. the current market interest rate.
b. the i* rate.
c. the company’s MARR.
d. the company’s cost of capital.

Definition Definition Net amount of cash that an entity receives and expends over the course of a given period. For a business to continue operating, positive cash flows are required, and they are also necessary to produce value for investors. Investors in particular prefer to see growing cash flows even after capital expenditures have been paid for (which is known as free cash flow).

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