Suppose an investment has cash inflows of R dollars at the end of each year for two years. The present value of these cash inflows using a 12% discount rate will be:

A. sometimes greater than under a 10% discount rate and sometimes less; it depends on R.
B. less than under a 10% discount rate.
C. greater than under a 10% discount rate.
D. equal to that under a 10% discount rate.


Answer: B

Business

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