Asked by ashanti morris on May 10, 2024
Verified
Normal Projects Q and R have the same NPV when the discount rate is zero.However,Project Q's cash flows come in faster than those of R.Therefore,we know that at any discount rate greater than zero,R will have a higher NPV than Q.
Discount Rate
The discount rate employed to ascertain the present worth of forthcoming cash flows in an analysis of discounted cash flow.
NPV
Net Present Value; the calculation of the present value of cash inflows minus the present value of cash outflows over a period.
Cash Flows
The movement of money into and out of a business, representing its operating, investing, and financing activities.
- Analyze the relationship between project cash flow timing and project evaluation metrics.
Verified Answer
Learning Objectives
- Analyze the relationship between project cash flow timing and project evaluation metrics.
Related questions
Projects S and L Both Have Normal Cash Flows,and the ...
A Project Has a Series of Non-Normal Cash Flows That ...
Although It Is Extremely Difficult to Make Accurate Forecasts of ...
Initial Investment Is Generally Least Subject to Forecasting Risk
According to the Incremental Cash Flow Principle, a Firm Should ...