A firm has three different investment options,each costing $10 million.Option A will generate $12 million in revenue at the end of one year.Option B will generate $15 million in revenue at the end of two years.Option C will generate $18 million in revenue at the end of three years.Which option should the firm choose?
A)Option A
B)Option B
C)Option C
D)The answer depends on the rate of interest.

Question

Quizplus · Accepted Answer

The best investment option depends on the present value of future cash flows, which requires knowing the rate of interest to discount future revenues.

A Firm Has Three Different Investment Options,each Costing $10 Million