The future returns are the extra revenue the firm will get from owning the machine.

The net present value of the machine is Rs.500

The firm might not buy the machine now simply because of the risk involved

If the firm does not buy the machine now, but redoes the calculations in three months, it might find the net present value has increased

If prices rise at a rate faster than the nominal interest rate, then real interest is negative

If the risk-free interest rate rises, the projects whose net present values are most affected are those with short lives

The internal rate of return on a project is the discount rate which would make its net present value zero

The internal rate of return on a project is a percentage measure of its expected returns

If the expected price next year exceeds the extraction cost by any amount

If the expected price next year exceeds the extraction cost but by less than 5%

If the expected price next year exceeds the extraction cost but by exactly 5%

If the expected price next year exceeds the extraction cost but by more than 5%

They expect the price next year, minus the extraction cost, to equal the figure for this year

They expect the price next year, minus the extraction cost, to exceed the figure for this year by less than 5%

They expect the price next year, minus the extraction cost, to exceed the figure for this year by exactly 5%

They expect the price next year, minus the extraction cost, to exceed the figure for this year by more than 5%

The owners expect the price minus extraction costs to rise each year at the same rate as the rate of interest

The owners expect the price to rise over time until it reaches the choke price

The owners expect the choke price to be reached when the mineral resource is exhausted

In practice, the price may not rise steadily over time, but it will always rise