Which one of these statements is correct?
A)Individuals tend to prefer later cash flows over current cash flows.
B)The value of an investment depends on the size,timing,and risk of the investment's cash flows.
C)When selecting one of two projects,managers should select the project with the higher total expected cash flow.
D)Most investors prefer greater risk over less risk.
E)Accountants record sales and expenses after the related cash flows occur.

Question

Quizplus · Accepted Answer

This statement is correct according to the time value of money principle, which states that the value of an investment is determined by the size, timing, and risk of the investment's expected cash flows. Investors use this principle to compare different investment options and make informed decisions. The other statements are not necessarily true in all circumstances. For example, A can be false if individuals have a pressing need for cash now, and C can be false if the projects have different time horizons or discount rates.

Which One of These Statements Is Correct