You are given two choices of investments, Investment A and Investment B. Both investments have the...
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You are given two choices of investments, Investment A and Investment B. Both investments have the same future cash flows. Investment A has a discount rate of 4%, and Investment B has a discount rate of 5%. Which of the following is true? A) The present value of cash flows in Investment A is equal to the present value of cash flows in Investment B. B) The present value of cash flows in Investment A is lower than the present value of cash flows in Investment B. C) The present value of cash flows in Investment A is higher than the present value of cash flows in Investment B. D) No comparison can be made-we need to know the cash flows to calculate the present value. You are given two choices of investments, Investment A and Investment B. Both investments have the same future cash flows. Investment A has a discount rate of 4%, and Investment B has a discount rate of 5%. Which of the following is true? A) The present value of cash flows in Investment A is equal to the present value of cash flows in Investment B. B) The present value of cash flows in Investment A is lower than the present value of cash flows in Investment B. C) The present value of cash flows in Investment A is higher than the present value of cash flows in Investment B. D) No comparison can be made-we need to know the cash flows to calculate the present value.
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While evaluating an investing project the future cash flows arising out of that project are discounted to compute the present value of those future cash flows The present value is computed to know the true value of the cash flows from the project today And then the net present value of the project is calculated to know the real worth of the project The discount ... View the full answer
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