The present value of a given future cash flow will decrease as the discount rate decreases.

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Chapter 16

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This activity contains 10 questions.

	As the discount rate increases the net present value increases.    True  False

	If the net present value is less than zero (negative), then the rate of return is less than the discount rate used.    True  False

	If the present value of the inflows is greater than the present value of the outflows, then the net present value is smaller than zero.    True  False

	In order to increase the net present value you have to decrease the discount rate.    True  False

	Net present value is the present value of cash inflows minus the present value of cash outflows.    True  False

	The profitability index is a ratio calculated by comparing the present value of the cash inflows with the present value of the cash outflows.    True  False

	To determine the discounted cash flows for two projects, calculate the future value and compare the results.    True  False

	When only cash outflows are considered, the discounted value can be negative.    True  False

	With discounted cash flow techniques, the cash flows are discounted by a given interest rate to determine present values.    True  False

	You accept all projects with a positive net present value.    True  False

What happens to the present value if you decrease the discount rate?

What happens to present value when discount rate increases?

Why does an increase in discount rate decrease the present value of future cash flows?

What happens to the present value if you decrease the discount rate quizlet?