Projects a and B Have the Same Expected Lives and Initial

question 59

Multiple Choice

Projects A and B have the same expected lives and initial cash outflows.However, one project's cash flows are larger in the early years, while the other project has larger cash flows in the later years.The two NPV profiles are given below: Which of the following statements is correct?

• A)Project A has the smaller cash flows in the later years.
• B)Project A has the larger cash flows in the later years.
• C)We require information on the required rate of return in order to determine which project has larger early cash flows.
• D)The NPV profile graph is inconsistent with the statement made in the problem.
• E)None of the above statements is correct.

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Definitions:

Pleasurable Consequence

A positive outcome or reward that follows a behavior, increasing the likelihood of the behavior being repeated.

Positively Reinforced

A process in behavioral psychology whereby a behavior is encouraged by rewards, leading to an increase in the likelihood of its recurrence.

Anxiety

A feeling of worry, nervousness, or unease typically about an imminent event or something with an uncertain outcome.

Partial Reinforcement

A conditioning strategy where a reward is not administered every time the desired behavior is performed, leading to more resistant learned behavior.