Projects a and B Have Identical Expected Lives and Identical

question 40

Multiple Choice

Projects A and B have identical expected lives and identical initial cash outflows (costs) . However, most of one project's cash flows come in the early years, while most of the other project's cash flows occur in the later years. The two NPV profiles are given below:σσσσWhich of the following statements is CORRECT?

• A) more of project b's cash flows occur in the later years.
• B) we must have information on the cost of capital in order to determine which project has the larger early cash flows.
• C) the npv profile graph is inconsistent with the statement made in the problem.
• D) the crossover rate, i.e., the rate at which projects a and b have the same npv, is greater than either project's irr.
• E) more of project a's cash flows occur in the later years.

---

Definitions:

Dependent Variable

In research, it’s the outcome or factor that researchers are interested in understanding or predicting, which changes in response to the independent variable.

Hawthorne Effect

The alteration of behavior by the subjects of a study due to their awareness of being observed.

Primary Data

Data that is collected directly by the researcher specifically for the purpose of their study, without going through any intermediary sources.

Sociological Survey

A research method used to collect data from participants through questionnaires or interviews to study human behaviors and attitudes.