You Are Considering Two Projects with the Following Cash Flows

question 36

Multiple Choice

You are considering two projects with the following cash flows: $$\begin{array} { l c c } & \text { Project X } & \text { Project Y } \\\text { Year 1 } & \mathbf { \$ 9 , 0 0 0 } & \mathbf { \$ 7 , 0 0 0 } \\\text { Year 2 } & \mathbf { 8 , 0 0 0 } & \mathbf { 7 , 5 0 0 } \\\text { Year 3 } & \mathbf { 7 , 5 0 0 } & \mathbf { 8 , 0 0 0 } \\\text { Year 4 } & \mathbf { 7 , 0 0 0 } & \mathbf { 9 , 0 0 0 }\end{array}$$ Which of the following statements are true concerning these two projects?
I.Both projects have the same future value at the end of year 4,given a positive rate of return.
II.Both projects have the same future value given a zero rate of return.
III.Project X has a higher present value than Project Y,given a positive discount rate.
IV.Project Y has a higher present value than Project X,given a positive discount rate.

• A)II only
• B)I and III only
• C)II and III only
• D)II and IV only
• E)I, II, and IV only

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