-An Investor Is Considering the Two Investments Shown Above

question 53

Multiple Choice

$\begin{array}{llllllll}\text { Time: }&\text { Year } 0 & \text { Year } 1 & \text { Year } 2 & \text { Year 3 } & \text { Year } 4 & \text { Year } 5& \text {Discount Rate }\\\text { Investment A: } & -\$ 1.5 \text { million } & \$ 300,000 & \$ 300,000 & \$ 300,000 & \$ 500,000 & \$ 500,000 & 8 \% \\\text { Investment B: } & -\$ 1.3 \text { million } & \$ 500,000 & \$ 400,000 & \$ 300,000 & \$ 200,000 & \$ 100,000 & 7 \%\end{array}$
-An investor is considering the two investments shown above. Which of the following statements about these investments is true?

• A) The investor should take investment A since it has a greater internal rate of return (IRR).
• B) The investor should take investment A since it has a greater net present value (NPV).
• C) The investor should take investment B since it has a greater net present value (NPV).
• D) Neither investment should be taken since they both have a negative net present value (NPV).

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Definitions:

Love Objects

People or things that are the focus of one's deep affection and emotional investment.

Later Attachments

Emotional bonds that are formed in later stages of life, building upon early attachment relationships.

Theoretical View

A perspective or model based on theories to explain phenomena or concepts in a systematic way.

Indiscriminate Attachment

A phase in early childhood development where infants show equal preference for social interaction with any caregiver, not showing a clear preference for their primary caregiver.