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Manal Elkhoshkhany
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You are analyzing the value of a potential investment by calculating

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You are analyzing the value of a potential investment by calculating the sum of the present values of its expected cash flow. Which of the following would lower the calculated value of the investment? A. The cash flows are in the form of a deferred annunity, and they total to $100,00. You learn that the annuity lasts for only 5 rather than 10 years, hence that each payment is for $20,000 rather than for $10,000. B. THe discount rate increases. C. The riskiness of the investment's cash flows decreases. D. The total amount of cash flows remains the same, but more of the cash flows are received in the earlier years and less are received in the later years. E. The discount rate decreases.
Submitted: 7 years ago.
Category: Finance
Expert:  Manal Elkhoshkhany replied 7 years ago.



The answer is:


B. THe discount rate increases.



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