Projects L and S Each Have an Initial Cost of $10,000,followed

question 182

Multiple Choice

Projects L and S each have an initial cost of $10,000,followed by a series of positive cash inflows.Project L has total,undiscounted cash inflows of $16,000,while S has total undiscounted inflows of $15,000.Further,at a discount rate of 10 percent,the two projects have identical NPVs.Which project's NPV will be more sensitive to changes in the discount rate? (Hint: Projects with steeper NPV profiles are more sensitive to discount rate changes. )

• A) Project S.
• B) Project L.
• C) Both projects are equally sensitive to changes in the discount rate since their NPVs are equal at all required rates of return.
• D) Neither project is sensitive to changes in the discount rate,since both have NPV profiles which are horizontal.
• E) The solution cannot be determined unless the timing of the cash flows is known.

---

Definitions:

Malpractice Suit

A legal action taken against a medical professional or healthcare organization for negligence or providing substandard care that results in harm or injury to a patient.

Medical Record

A comprehensive document containing a patient's medical history, treatment plans, and progress notes, maintained for clinical and legal purposes.

Safe Care

Healthcare practices aimed at minimizing risk and harm to patients.

Confidential Information

Sensitive information that is intended to be kept secret and is protected by privacy laws and regulations.