You plan to analyze the value of a potential investment by calculating the sum of the present
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Question:
You plan to analyze the value of a potential investment by calculating the sum of the present values of its expected cash flows. Which of the following would increase the calculated value of the investment?
Question 14 options:
| The discount rate increases. |
| The cash flows are in the form of a deferred annuity, and they total to $100,000. You learn that the annuity lasts for 10 years rather than 5 years, hence that each payment is for $10,000 rather than for $20,000. |
| The discount rate decreases. |
| The riskiness of the investment's cash flows increases. |
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