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Project a Has Cash Flows of $4,000, $3,000, $0, and $3,000

Question 5

Multiple Choice

Project A has cash flows of $4,000, $3,000, $0, and $3,000 for Years 1 to 4, respectively. Project B has cash flows of $2,000, $3,000, $2,000, and $3,000 for Years 1 to 4, respectively. Which one of the following statements is correct assuming the discount rate is positive? (No calculations needed)  


A) The cash flows for Project B are an annuity, but those of Project A are not. 
B) Both sets of cash flows have equal present values as of Time 0. 
C) The present value at Time 0 of the final cash flow for Project A will be discounted using an exponent of three. 
D) Both projects have equal values at any point in time since they both pay the same total amount. 
E) Project B is worth less today than Project A. 

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