You have just won the university lottery. If you graduate, you will receive a refund equal to the amount of tuition you paid in your first four years of school
However, you need money now and a firm that specializes in buying expected future cash flows has offered to discount the lottery winnings at a rate of 8% and pay you cash today in exchange for your future lottery winnings. Since you have studied finance, you insist that they discount the cash flows at 12% instead of 8% because there is some risk as to the certainty of your graduating. If the firm agrees to your demand, then this means they will increase the present value of what they will pay you today.
Indicate whether the statement is true or false.
Answer: FALSE
Explanation: An increase in the discount rate will decrease the present value of what the firm will pay you today.
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Indicate whether the statement is true or false
_______ is NOT a criterion for judging the validity of a segmentation scheme
a. Measurable b. Profitable c. Actionable d. Applicable