## All else held constant, the present value of a bond increases when the:

a. Coupon rate decreases.
b. Yield to maturity decreases.
c. Current yield increases.
d. Time to maturity of a premium bond decreases.
e. Time to maturity of a zero coupon bond increases.

## Which one of the following statements concerning net present value (npv) is correct?

A. An investment should be accepted if, and only if, the NPV is exactly equal to zero.
B. An investment should be accepted only if the NPV is equal to the initial cash flow.
C. An investment should be accepted if the NPV is positive and rejected if it is negative.
D. An investment with greater cash inflows than cash outflows, regardless of when the cash flows occur, will always have a positive NPV and therefore should always be accepted.
E. Any project that has positive cash flows for every time period after the initial investment should be accepted.

## As the discount rate becomes higher and higher, the present value of inflows approaches

A. 0.
B. minus infinity.
C. plus infinity.

A. \$6,671.13
B. \$6,643.29
C. \$6,395.31
D. \$6,023.58
E. \$7,253.72

## Which one of the following variables is the exponent in the present value formula?

A. Present Value
B. Interest Rate
C. Number of time periods
D. Future Value
E. There is no exponent in the present value formula

## Which of the following is a present value method of analyzing capital investment proposals?

a. Average rate of return
b. Cash payback method
c. Accounting rate of return
d. Net present value