Question

Pick one correct statement regarding two projects with the cash flows, as indicated in the table below, given a positive discount rate.
Project A Project B
Year 1 $10,000 6000
Year 2 9000 8000
Year 3 8000 9000
Year 4 6000 10000
a. Project B has a higher present value than Project A.
b. Project A has both a higher present and a higher future value than Project B.
c. Both projects are ordinary annuities.
d. Both projects have the same future value at the end of Year 4.
e. Both projects have the same value at Time 0.

Answer 1

Answer:

Explanation:

Pick one correct statement regarding two projects with the cash flows, as indicated in the table below, given a positive discount rate.

Project A Project B

Year 1 $10,000 6000

Year 2 9000 8000

Year 3 8000 9000

Year 4 6000 10000

a. Project B has a higher present value than Project A.

b. Project A has both a higher present and a higher future value than Project B.

c. Both projects are ordinary annuities.

d. Both projects have the same future value at the end of Year 4.

e. Both projects have the same value at Time 0.