Project A has cash flows of $4,000, $3,000, $0, and $3,000 for Years 1 to 4, respectively. Project B has cash flows of $2,000, $3,000, $2,000, and $3,000 for Years 1 to 4, respectively. Which one of the following statements is correct assuming the discount rate is positive? (No calculations needed)
a. The cash flows for Project B are an annuity, but those of Project A are not.
b. Both sets of cash flows have equal present values as of Time 0.
c. The present value at Time 0 of the final cash flow for Project A will be discounted using an exponent of three.
d. Both projects have equal values at any point in time since they both pay the same total amount.
e. Project B is worth less today than Project A.
Answers: 3
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Project A has cash flows of $4,000, $3,000, $0, and $3,000 for Years 1 to 4, respectively. Project B...
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