A Company Facing an Interest Rate of 8% Must Choose

question 41

Multiple Choice

A company facing an interest rate of 8% must choose among projects offering the following four-year cash flows.If the company is employing the net present value criterion,which project should they choose?

• A)$25,000 in year 1;$15,000 in year 2;$10,000 in year 3;and $5,000 in year 4
• B)$5,000 in year 1;$5,000 in year 2;$20,000 in year 3;and $30,000 in year 4
• C)$15,000 in year 1;$15,000 in year 2;$15,000 in year 3;and $15,000 in year 4
• D)$5,000 in year 1;$5,000 in year 2;$25,000 in year 3;and $25,000 in year 4

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Definitions:

Legumes

A group of plants, including beans, peas, and lentils, that have the ability to fix nitrogen from the air into the soil, improving soil fertility.

Dry Fruit

a type of fruit where the outer layer becomes hard at maturity, protecting the seeds inside without using fleshy tissue.

Ovary

A female reproductive organ in animals and plants where ova or eggs are produced.

Carpels

The female reproductive organs of a flower, consisting of the stigma, style, and ovary.