Podcast
Questions and Answers
What is the primary purpose of an economic evaluation?
What is the primary purpose of an economic evaluation?
- To determine the financial desirability of a project or investment (correct)
- To compare the performance of different economic sectors
- To assess the social and environmental impact of economic activities
- To analyze the market trends and predict future economic conditions
What is the difference between interest rate and discount rate?
What is the difference between interest rate and discount rate?
- Interest rate and discount rate are the same, and they both represent the cost of borrowing money
- Interest rate is the price paid for the use of money, while discount rate is the rate at which the value of money decreases over time
- Interest rate is the rate at which money grows, while discount rate is the rate at which money is borrowed
- Interest rate is the rate of gain received from an investment, while discount rate is the rate at which future amounts are reduced to their present value (correct)
What does an 11% interest rate indicate?
What does an 11% interest rate indicate?
- For every dollar of money used, an additional $0.11 must be returned as payment for the use of that money (correct)
- For every dollar of money used, an additional $11 must be returned as payment for the use of that money
- For every dollar of money used, the borrower must pay $0.11 in interest charges
- For every dollar of money used, the lender will receive $0.11 in interest income
Who determines the interest rate?
Who determines the interest rate?
What is the main purpose of the discount rate?
What is the main purpose of the discount rate?
How is the interest rate different from the discount rate?
How is the interest rate different from the discount rate?
What is the main difference between discount rate and interest rate?
What is the main difference between discount rate and interest rate?
What does the payback period represent in a firm's investment?
What does the payback period represent in a firm's investment?
In the context of the time value of money, why is a dollar received in the future worth less than a dollar received today?
In the context of the time value of money, why is a dollar received in the future worth less than a dollar received today?
What concept arises due to the relationship between interest and time in finance?
What concept arises due to the relationship between interest and time in finance?
How does the time value of money affect investments over different periods?
How does the time value of money affect investments over different periods?
Given an option between two investments, how does the cost of capital affect decision-making?
Given an option between two investments, how does the cost of capital affect decision-making?
What is the primary difference between NPV and IRR in terms of reinvestment assumptions?
What is the primary difference between NPV and IRR in terms of reinvestment assumptions?
If the NPV of a project is negative, what should a company do?
If the NPV of a project is negative, what should a company do?
What is the relationship between NPV and IRR when NPV = 0?
What is the relationship between NPV and IRR when NPV = 0?
Why do companies prefer larger cash inflows in the early years of a project?
Why do companies prefer larger cash inflows in the early years of a project?
Which statement best describes the relationship between NPV and payback period?
Which statement best describes the relationship between NPV and payback period?
Which of the following statements about NPV and IRR is true?
Which of the following statements about NPV and IRR is true?
