An Investor Is Considering the Two Investments Shown Above

question 64

Multiple Choice

$\begin{array} { l c c c c } \text { Time: } & 0 & 1 & 2 & 3 \\\text { Investment A: } & - \$ 1 \text { million } & \$ 300,000 & \$ 400,000 & \$ 500,000 \\\text { Investment B: } & - \$ 1 \text { million } & \$ 500,000 & \$ 400,000 & \$ 300,000\end{array}$
An investor is considering the two investments shown above. Her cost of capital is 9%. Which of the following statements about these investments is true?

• A) The investor should take investment B since it has a greater net present value (NPV).
• B) The investor should take investment B since it has a greater internal rate of return (IRR).
• C) The investor should take investment A since it has a greater net present value (NPV).
• D) The investor should take investment A since it has a greater internal rate of return (IRR).

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