If we use future value rather than present value to decide whether to make an investment, A) we will make a bad decision, since the future value will always be higher if the discount rate is positive. B) we will make a bad decision, since the future value will always be lower if the discount rate is positive. C) we will make the same decision using either future value or present value. D) There is not enough information given to answer the question.
If we use future value rather than present value to decide whether to make an investment, A) we will make a bad decision, since the future value will always be higher if the discount rate is positive. B) we will make a bad decision, since the future value will always be lower if the discount rate is positive. C) we will make the same decision using either future value or present value. D) There is not enough information given to answer the question.
Chapter11: Capital Budgeting Decisions
Section: Chapter Questions
Problem 16MC: When using the NPV method for a particular investment decision, if the present value of all cash...
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If we use
A) we will make a bad decision, since the future value will always be higher if the discount rate is positive.
B) we will make a bad decision, since the future value will always be lower if the discount rate is positive.
C) we will make the same decision using either future value or present value.
D) There is not enough information given to answer the question.
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