Answered: Describe the Decision Rule for Simple…

Business

Economics

Describe the Decision Rule for Simple Investments?

Economics Today and Tomorrow, Student Edition

1st Edition

ISBN:9780078747663

Author:McGraw-Hill

Publisher:McGraw-Hill

Chapter8: Business Organizations

Section: Chapter Questions

Problem 11AA

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Question

Describe the Decision Rule for Simple Investments?

Expert Solution

Step 1

In a simple investment, cash flows change sign only one time. For example, negative cash flow in the beginning and thereafter series of positive cash flows during the project. The simple Investment is an Investment, which included in the day to day life like buying goods from consumption for upcoming days, buying government bonds, stocks and keeping money in bank to take the advantage of interest rate.

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