Question

Which of the following statements is true?

The present value of a cash flow will never be greater than the future dollar amount of the cash flow. The higher the discount rate, the higher the present value of a given future cash flow. The present value of a cash flow increases as it moves further into the future.

Multiple Choice

a. Only statement III is true.

b. All of the statements are true.

c. Only statement I is true.

d. None of the statements are true.

Question

Which of the following statements is true?

The required rate of return is the maximum rate of return that an investment project must yield to the acceptable. The cost of capital is the average rate of return that the company earns on its investments. The net present value method assumes that cash flows from a project are immediately reinvested at a rate of return equal to the internal rate of return.

Multiple Choice

a. Only statement I is true.

b. Only statement III is true.

c. None of the statements are true.

d. All of the statements are true.