Assume That Two Investments Have a Three-Year Life and Generate

question 25

Multiple Choice

Assume that two investments have a three-year life and generate the cash flows shown below. Which of the two would you prefer? Year Investment A Investment B
1 $5,000 $8,000
2 $5,000 $5,000
3 $5,000 $2,000

• A) Investment A, since it has the most even cash flows
• B) Investment B, since it gives you the largest cash flows in earlier years
• C) Neither, since they both have equal lives
• D) Both investments are equally attractive

---

Definitions:

Interferon

A protein released by cells, usually in response to the entry of a virus, that has the property of inhibiting virus replication.

Phagocyte

A type of cell within the body capable of engulfing and absorbing bacteria and other small cells and particles.

Sterile Dressing

The application of a sterile covering over a wound to promote healing and protect the site from infection.

Sterile Forceps

Tools that have been sterilized to be free from any living microorganisms, used in medical procedures to handle sterile items or tissues without contaminating them.