Which One of the Following Statements Is Correct Given the Following

question 71

Multiple Choice

Which one of the following statements is correct given the following two sets of project cash flows?

• A) The cash flows for Project B are an annuity, but those of Project A are not.
• B) Both sets of cash flows have equal present values as of time zero given a positive discount rate.
• C) The present value at time zero of the final cash flow for Project A will be discounted using an exponent of three.
• D) The present value of Project A cannot be computed because the second cash flow is equal to zero.
• E) As long as the discount rate is positive, Project B will always be worth less today than will Project A.

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Definitions:

Corporation

A legal entity formed by issuing stock to investors, who are the owners of the corporation.

Preferences

Preferences typically involve decisions or policies that give priority or advantage to particular individuals or groups, often seen in legal contexts such as bankruptcy.

Corporate Veil

A legal concept separating the actions of a corporation from its shareholders, protecting them from being personally liable for the company's debts and obligations.

Fraud

The intentional deception or misrepresentation made by one party to another, resulting in harm or loss.