RainMan Inc A)Airplane Because It Has a Higher NPV
B)Weather Machine Because

question 5

Multiple Choice

RainMan Inc.is in the business of producing rain upon request.They must decide between two investment projects: a new airplane for seeding rain clouds or a new weather control machine built by Dr.Nutzbaum.The discount rate for the new airplane is 9%,while the discount rate for the weather machine is 39% (it happens to have higher market risk) .Which investment should the company select and why? (Assume a 0% inflation rate and that projected costs do not change over time.) $$\begin{array} { l c c } \text { Year } & \text { Airplane } & \text { Weather Machine } \\\hline 0 & - 900 & - 900 \\1 & 500 & 550 \\2 & 600 & 600 \\3 & & 685\end{array}$$

• A)Airplane because it has a higher NPV
• B)Weather machine because it has a higher NPV
• C)Airplane because it has a higher equivalent annual cash flow
• D)Weather machine beca

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Travelers Checks

Preprinted, fixed-amount checks designed to allow the person signing them to make payments or exchange for local currency, used mainly by travelers to protect against theft or loss.

M1 Balance

The most liquid components of the money supply, including physical currency, demand deposits, and other assets that can quickly be converted to cash.

Currency

A form of currency widely accepted in a specific nation or economic setting.

Measure Of Value

A standard of value that allows the worth of various goods and services to be compared; often associated with money as a common denominator for value comparison.