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You are looking at an investment that will provide the following cash flows in dollars: (Year 1: 15,000); (Year 2: 20,000); (Year 3: 25,000). If the discount rate increases from 7% to 10 %, what will happen to the Present Value of the investment today? The present value will increase. The present value will decrease. The present value will remain unchanged. The present value will increase but only slightly.

You are looking at an investment that will provide the following cash flows in dollars: (Year 1: 15,000); (Year 2: 20,000); (Year 3: 25,000). If the discount rate increases from 7% to 10 %, what will happen to the Present Value of the investment today? The present value will increase. The present value will decrease. The present value will remain unchanged. The present value will increase but only slightly.

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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You are looking at an investment that will provide the following cash flows in dollars: (Year 1: 15,000); (Year 2: 20,000); (Year 3: 25,000). If the discount rate increases from 7% to 10 %, what will happen to the Present Value of the investment today? The present value will increase. The present value will decrease. The present value will remain unchanged. The present value will increase but only slightly.
Transcribed Image Text:You are looking at an investment that will provide the following cash flows in dollars: (Year 1: 15,000); (Year 2: 20,000); (Year 3: 25,000). If the discount rate increases from 7% to 10 %, what will happen to the Present Value of the investment today? The present value will increase. The present value will decrease. The present value will remain unchanged. The present value will increase but only slightly.
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