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the interest rate increases, net present value: Increases Could increase or decrease Does not change DecreasesIf you determine that the present value of a stream of payments is $20,000 and the immediate investment required to get thatThe intersection of the demand curve can be used to: Identify the economic value of the good or service exchanged Both of the

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Answer #1

1> could increase or decrease

If the cash flows are all positive, then due to increase in the interest rate, the NPV will fall but if the cash flows are all negative, then due to increase in the interest rate, the NPV will rise.

2> No

Since the NPV of the future payments must be more than the current investment for the project to be profitable, I will not invest.

3> Both of the above

Of course in a perfect competitive market, it will be the equilibrium price and output. We can also determine the welfare out of it based on the intersection value.

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