Net Present Value Is Being Used to Break the Tie

question 31

Multiple Choice

Net present value is being used to break the tie among four otherwise equal projects.If the interest rate is 4%,which of these anticipated four-year flows would yield the greatest net present value?

• A)$10,000 in year 1;$11,000 in year 2;$12,000 in year 3;and $13,000 in year 4
• B)$13,000 in year 1;$12,000 in year 2;$11,000 in year 3;and $10,000 in year 4
• C)$10,000 in year 1;$10,000 in year 2;$13,000 in year 3;and $13,000 in year 4
• D)$11,000 in year 1;$11,000 in year 2;$12,000 in year 3;and $12,000 in year 4

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Definitions:

Utilitarian

Describes products, services, or actions that are practical and functional rather than decorative or ornamental.

Hedonic

Relating to or considered in terms of pleasant (or unpleasant) sensations; often used in the context of hedonic consumption which refers to the utility derived from pleasure.

Linda Lundstrom

A Canadian fashion designer known for her innovative designs and contributions to the Canadian fashion industry.

Cognitive Dissonance

is the psychological discomfort experienced when holding two or more contradictory beliefs, values, or ideas, often leading to an alteration in beliefs or behaviors to reduce the dissonance.