Answer:
the investment with large cash flow early
Explanation:
This can be illustrated with an example.
There are 2 investments A and B
The cash flows of A =
Cash flow in year 1 = $50,000
Cash flow in year 2 = 0
Cash flow in year 3 = 0
The cash flows of B =
Cash flow in year 1 = 0
Cash flow in year 2 = 0
Cash flow in year 3 = 50,000
Discount rate for both investment is 40%
Present value of A = $35,714.29
Pesent value for B = $18,221.57
It can be seen that the investment with the higher cash flow early has a higher present value
The first step that an investor should take before beginning to invest should be to establish investment objectives.
Answer:
Each company drills two wells and experiences a profit of $22 million.
Explanation:
If each company acts independently and drills two oil wells each they will have a total of 4 wells each worth (60 million ÷ 4= $15 million.
Each company will have two oil wells which equals (2* 15 million = $30 million)
But each company incurs cost of $4 million per well. That is total cost of $8 million.
Therefore the profit for each company will be $30 million - $8 million= $22 million
Stocks are securities that represent ownership in the one company you decide to invest in.For companies its a way to make money to invest in other projects yet for investors its a way to earn money and outpace inflation over time.
Hope that answers
