You Are Analyzing the Value of a Potential Investment by Calculating

Multiple Choice

You are analyzing the value of a potential investment by calculating the sum of the present values of its expected cash flows. Which of the following would lower the calculated value of the investment?

A) The discount rate increases.
B) The riskiness of the investment's cash flows decreases.
C) The total amount of cash flows remains the same, but more of the cash flows are received in the earlier years and less are received in the later years.
D) The discount rate decreases.