You Are Considering Two Projects

question 91

Multiple Choice

You are considering two projects.Project A has projected cash flows of $6,500,$4,500,and $2,500 for the next three years,respectively.Project B has projected cash flows of $2,500,$4,500,and $6,500 for the next three years,respectively.Assuming both projects have the same initial cost,you know that:

• A)there are no conditions under which the projects can have equal values.
• B)Project B has a higher net present value than Project A.
• C)Project A is more valuable than Project B given a positive discount rate.
• D)both projects offer the same rate of return.
• E)both projects have equal net present values at any discount rate.

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Definitions:

Increases

Refers to a situation where there is a rise in value, quantity, or another measurable factor.

Discretionary Components

Elements of an employee's compensation that are not fixed, including bonuses, incentives, and other forms of variable pay based on performance.

Gross Income

The total revenue generated by a person or organization before any deductions are made for expenses.

Consumer Confidence

A measure of how optimistic or pessimistic consumers are regarding their expected financial situation and the overall economy.