Boston Corp. is evaluating three projects. Each project will return a total of $600,000 to the company in cash flows over a three-year period. The cash flows for the three projects are as follows: $$\begin{array} { | l c c c c }
\hline& \text { Year 1 } & \text { Year 2 } & \text { Year 3 } & \text { Tatal } \
\text { Praject A } & \$ 300,000 & \$ 200,000 & \$ 100,000 & \$ 600,000 \
\text { Praject B } & 200,000 & 200,000 & 200,000 & 600,000 \
\text { Praject C } & 100,000 & 200,000 & 300,000 & 600,000 \
\hline
\end{array}$$ Which project represents the best investment for Boston?

Question

Boston Corp. is evaluating three projects. Each project will return a total of $600,000 to the company in cash flows over a three-year period. The cash flows for the three projects are as follows: $$\begin{array} { | l c c c c } 
\hline& \text { Year 1 } & \text { Year 2 } & \text { Year 3 } & \text { Tatal } \
\text { Praject A } & \$ 300,000 & \$ 200,000 & \$ 100,000 & \$ 600,000 \
\text { Praject B } & 200,000 & 200,000 & 200,000 & 600,000 \
\text { Praject C } & 100,000 & 200,000 & 300,000 & 600,000 \
\hline
\end{array}$$ Which project represents the best investment for Boston?

Quizplus · Accepted Answer

Project A returns the highest cash flow in the earliest year, which is preferable due to the time value of money, assuming no other information like discount rates is provided.

Boston Corp Which Project Represents the Best Investment for Boston? A) Project

Boston Corp Which Project Represents the Best Investment for Boston?
A) Project