Explain why a firm may rationally make an investment when its cash flow from the investment is not positive each year
What will be an ideal response?
A firm will examine the net present value of the investment to determine if the investment should be made. The net present value of the cash flow for an investment may be negative for some years, but when all the years of the investment are considered, if the net present value of the investment is positive, the investment should be made.
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Suppose there are two types of labor, high skilled and low skilled
The demand curve for high skilled labor lies ________ the demand curve for low skilled labor and the supply curve of high skilled labor lies ________ the supply curve of low skilled labor. A) above; above B) above; below C) below; below D) below; above
Amber has opened a coffee shop for many years on a piece of land that she has also owned. She has also made accounting profits from the coffee shop
This year, rents in the area rose considerably, and Amber responded by deciding to sell the land and the coffee shop to an apartment builder. How can you explain Amber's decision to sell her business?