Author Question: If the interest rate is 25, but cash flows change such that the investment renders a cash flow of ... (Read 63 times)

mynx · **on:** Jul 1, 2018

If the interest rate is 25, but cash flows change such that the investment renders a cash flow of 500 in year 1 and 800 in year 2 instead of year 3, would the investment take place?
a. Yes since NPV>0
b. No since NPV<0
c. Yes since the present value of the cash flows is greater than zero
d. No since the present value of the cash flows is lesser than zero

Question 2

Which of the following is FALSE about indirect price discrimination
a. It requires identifying some feature that is correlated with different value customers
b. The firm must be able to charge different prices to the different value customers
c. The firm must be able to prevent arbitrage
d. All of the above