Instructions Part 1 : True/False (10 points each *8-80 points) Indicate whether
ID: 2601683 • Letter: I
Question
Instructions Part 1 : True/False (10 points each *8-80 points) Indicate whether the following statement is true or false. Provide at least five sentences of explanation to support your answer. Even if the answer is true, students need to elaborate to earn full credit The required return to implement a given business project will be lower if interest rates are lower. This implies that businesses will demand a lower quantity of loanable funds when interest rates are lower because projects are more likely to yield negative NPV at the lower 1. discount rate 100% Page 1 of 6 459 wordsExplanation / Answer
Answer:- False
Correct Answer :-
1. The required return to implement a given business project will be lower if interest rates are lower. Thus implies that businesses will demand a greater quantity of loan able funds when interest rates are lower.
2. Return on investment is a term that seems to come ad go in cycles.
3. Return on investment is very much important but it gives more prominence especially in the media when the economy is slower.
4. Almost all the organisation will demand greater amount of borrowed funds when the rate of interest is drastically lower than thd initial stages.
5. The effective return on investment made on a given project will be lower if the interest rates ard lower. Higher the risk higher the return.