Which of the following investments has the highest net present value (NPV),given that the interest rate is 5.5%?
A)one that pays $250 at the end of each of the next four years
B)one that pays $500 at the end of next year and $500 in four years' time
C)one that pays $250 at the end of next year and $750 in four years' time
D)one that pays $200 at the end of next year,$200 at the end of the second year,and $300 at the end of the third and fourth years
E)one that pays $250 at the beginning of each year for the next four years.

Question

Quizplus · Accepted Answer

Option E has the highest NPV because payments are made at the beginning of each year, which means each payment is discounted for one less year compared to the other options where payments are made at the end of each year. This results in a higher present value for the cash flows.

Which of the Following Investments Has the Highest Net Present