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An investment computed at
A. True
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- Which of the following statements describing the elements of intrinsic valuation is most accurate? a. A simple calculation of present values of expected cashflows of different investments using the risk free rate would be enough to determine which asset is best. b. The risk-free rate is the lowest rate that an investor can earn from short-term investments.c. When the present value of the cashflows is discounted with the appropriate rate end this present value is positive, then the asset providing these cashflows have a value to the investor. d.Cashflows may include depreciatipon expenses and amortization costs.Explain Simple versus Nonsimple Investments?Identify the one true statement. a. The B/C method determines the ratio of the present worth of benefits to the negative of the future worth of the investments. b. The CW method determines the present worth using a finite planning horizon. c. The IRR method determines the interest rate that yields a future worth of zero. d. The ERR method determines the interest rate that yields a present worth of zero.
- The most accurate way to analyze the profitability of an investment is to compute the payback period. A. True B. FalseWhich of the following statements is true? Multiple Choice When NPV is 0, the IRR is equal to the discount rate. When NPV is 0, the investment is not making a profit. In calculating IRR, we make the assumption all cash flows are reinvested at the discount rate. NPV is a good measure to use when comparing investments of different sizes.When using the NPV method for a particular investment decision, if the present value of all cash Inflows Is greater than the present value of all cash outflows, then _______ . A. the discount rate used was too high B. the investment provides an actual rate of return greater than the discount rate C. the investment provides an actual rate of return equal to the discount rate D. the discount rate is too low
- Which of the following is a true statement regarding the future worth of a single investment alternative? (a) It will be equal to both the present worth and the annual worth if the same discounting interest rate is used. (b) Choose to invest if the calculated amount is less than zero at the investment rate of return. (c) It will yield a recommendation consistent with the present worth and annual worth methods if the same discounting interest rate is used.(d) It cannot be used to evaluate single investment alternatives.An inflation hedge is an asset that increases in value at a rate equal to or greater than the rate of inflation. Group of answer choices a. True b. False“Even in an efficient market, it is still valid to seek out a ‘favourable’ rate of returnfrom an equity investment. In an efficient market, one security is as good as any other.”Do you agree with this statement? Discuss your point of view.