Which of the Following Investments Has a Higher Present Value

question 27

Multiple Choice

Which of the following investments has a higher present value, assuming the same (strictly positive) interest rate applies to both investments?

• A)Investment X has a higher present value.
• B)Investment X and Investment Y have the same present value, since the total of the cash flows is the same for both.
• C)Investment Y has a higher present value.
• D)No comparison can be made-we need to know the interest rate to calculate the present value.

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Definitions:

Vested Interest

Having a personal stake or concern in an outcome that typically leads to biased decision-making.

Attitude Domain

The range of beliefs, feelings, and behavioral intentions toward a particular object, person, or subject.

Resistance to Change

The reluctance or refusal to adapt to changes in one's environment or way of doing things.

Mock Jurors

Individuals who are used in a simulated court case for the purpose of research, training, or to predict the outcome of a real trial.