Projects a and B Have Identical Expected Lives and Identical

question 51

Multiple Choice

Projects A and B have identical expected lives and identical initial cash outflows (costs) . However, most of one project's cash flows come in the early years, while most of the other project's cash flows occur in the later years. The two NPV profiles are given below:Which of the following statements is CORRECT?

• A) More of Project A's cash flows occur in the later years.
• B) More of Project B's cash flows occur in the later years.
• C) We must have information on the cost of capital in order to determine which project has the larger early cash flows.
• D) The NPV profile graph is inconsistent with the statement made in the problem.
• E) The crossover rate, i.e., the rate at which Projects A and B have the same NPV, is greater than either project's IRR.

---

Definitions:

Substantia Nigra

A region of the brain that plays an important role in movement, and whose degeneration is a hallmark of Parkinson's disease.

Voluntary Motor Activity

Movement generated intentionally by an individual, typically involving the skeletal muscle system.

Transcranial Magnetic Stimulation

A noninvasive procedure that uses magnetic fields to stimulate nerve cells in the brain to improve symptoms of certain mental health conditions.

Brain Activity

The electrical and chemical processes occurring within the brain that enable thinking, feeling, and coordination of sensory and motor functions.