A Firm Is Considering Two Projects with the Following Cash

question 45

Multiple Choice

A firm is considering two projects with the following cash flows: $\begin{array}{rrr} & \text { Project A } & \text { Project B } \\\text { Year 1 } & £ 40,000 & £ 140,000 \\\text { Year 2 } & 60,000 & 60,000 \\\text { Year 3 } & 140,000 & 40,000\end{array}$ Each project requires an investment of £120,000. Which project will have the higher net present value?

• A)Project A
• B)Project B
• C)Project A and Project B will have the same net present value.
• D)The question cannot be answered from the information provided.

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Definitions:

Boston Consulting Group (BCG)

A global management consulting firm known for its expertise in business strategy and the development of the BCG matrix.

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The extent to which a product is recognized and bought by customers in a particular market.

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An element of organizational leadership that focuses on meeting customer expectations through the continuous improvement of the operational processes and the culture of the organization.