The NPV of an investment made today is $10,000. If postponed for one year, the NPV at that time will increase by $1,000. Which of the following is correct if the opportunity cost of the investment is 12 percent?
A) postpone; the NPV will be larger.
B) postpone; the NPV increases by a positive amount.
C) invest now; always accept positive NPV projects.
D) invest now; NPV does not grow at a sufficient rate.
Ans: D) invest now; NPV does not grow at a sufficient rate.
Business
You might also like to view...
Insurance companies collect premiums in advance. Since the premiums collected are not needed to pay losses and expenses immediately, the funds can be loaned to business firms. Because of this fact, insurance benefits society by
A) enhancing credit. B) providing a source of investment funds. C) indemnifying losses. D) providing an incentive for loss prevention.
Business
What is the purpose of role-play and when should it be used?
What will be an ideal response?
Business