Dynaflex Corp. is considering an investment project that costs ...

[RODY.ELKHALIL]

Question 1

Tomʹs Donuts can invest in a new espresso machine that costs $500 and will yield expected profits of $350 each year for two years. At higher interest rates, the present discounted value of profits from the investment

◦ increases.
◦ decreases.
◦ is unchanged.
◦ is indeterminate from the given information.

Question 2

Dynaflex Corp. is considering an investment project that costs $900 today. It expects the project will yield income of $350 at the end of years 1, 2, and 3. If the interest rate is 10%, the firm

◦ should undertake the investment.
◦ should forgo the investment.
◦ is just indifferent between undertaking the investment and not.
◦ indeterminate from the given information

[tennis14576]

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