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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Definitions:

Red Algae

A group of predominantly marine algae, known for their distinctive red coloration, contributing significantly to oceanic ecosystems.

Green Algae

Diverse group of photosynthetic organisms found primarily in aquatic environments, important for oxygen production and as a base in the food web.

Land Plants

Plants that have adapted to live in terrestrial habitats, exhibiting features such as roots, stems, and leaves for survival on land.

Red Tides

A phenomenon caused by algal blooms that turn the sea or other bodies of water a red or reddish color, often resulting in toxic effects on marine life.