Two Government Projects Have the Following Benefit Profiles

question 4

Multiple Choice

Two government projects have the following benefit profiles:

-Which of the following statements is accurate?

• A) Because the combined benefits of the two projects over the four years each equals 160,000, the net present value of the projects will be equal.
• B) Because the sum of benefits 160,000) exceeds the investment cost 100,000) for both projects, the net present value of both projects will always be positive.
• C) The net present value of Project A becomes negative at a higher discount rate than does the net present value of Project B
• D) The net present value of Project B becomes negative at a higher discount rate than does the net present value of Project A

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Definitions:

Unilateral Contract

A contract in which one party makes a promise in exchange for the other's performance, which constitutes acceptance of the offer, focusing on acted-upon promises rather than exchanges of promises.

Full Performance

The complete fulfillment of all terms and obligations specified within a contract, leading to its termination upon satisfactory execution by all parties involved.

Bilateral Contract

A contractual agreement involving two parties where each promises to perform an act in exchange for the other's act, with mutual obligations binding both parties.

Promised Offer

An offer made by one party to another indicating a willingness to enter into a contract under specified terms.