Question

question 1

Consider the following two projects:

Time         Cash Flows

                A                      B

0          -$4,000               -$4,000

1           $2,003               $0

2            $2,003               $0

3            $2,003               $0

4           $2,003               $10,736

Assuming a 14 percent discount rate, which project would you prefer?

Hint: Use NPV method

	I.	Project B, because it has a higher NPV
	II.	None of the above
	III.	Project A, because it has a higher NPV
	IV.	Project A, because it has a higher IRR
	V.	Project B, because it has a higher IRR

Answer 1