Project A has an expected cash flow of $500,000 at the end of year 5.Project B has an expected cash flow of $100,000 to be received at the end of each year for the next five years.What can be said of the net present value of project A compared to project B?
A) They are the same because both cash flows total $500,000 over the lives of the projects.
B) Project A is preferred because of the largest lump-sum payment in year 5.
C) Project B is preferred because of the periodic payments made consistently throughout the years and are made earlier.
D) The both have the same internal rate of return and either should be accepted.
Correct Answer:
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