You Are Comparing Two Investments,A and B,with Unequal Annual Cash

question 35

Multiple Choice

You are comparing two investments,A and B,with unequal annual cash flows and varying numbers of years.Which one of these statements is correct regarding this comparison?

• A)If A has the higher net present value at one discount rate,then A will have the higher net present value at all other discount rates.
• B)If B has a higher net present value,then B will have the higher net future value at any point in time,given a stated discount rate.
• C)If B has a higher net future value at one discount rate,then B will have the higher net present value given any discount rate.
• D)The two projects cannot be compared since their time periods differ in length.
• E)The project with the greater number of years will have the higher present value.

Apply critical thinking principles to analyze and approach real-life problems and scenarios.

Understand the concept and legal implications of uttering a forged instrument.

Comprehend the rights of bank customers under the Check 21 Act.

Identify the roles and responsibilities in electronic fund transfers.

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Definitions:

Ordinary Annuity

An ordinary annuity is a series of equal payments made at the end of consecutive periods over a fixed length of time.

Deferred Annuity

An insurance product that provides for the accumulation of capital on a tax-deferred basis, with payouts commencing at a future date, typically used as a retirement planning tool.

Ordinary Annuity

A series of equal payments made at regular intervals, with the typical assumption that each payment occurs at the end of a period.

Deferred Annuity

An insurance product that provides future payments to the holder, typically starting at retirement, after an initial investment period.