Projects A and B both require an initial investment of $100,000. Project A produces $200,000 in cash flows in the subsequent 5 years. Project B produces cash flow of $400,000 next year, $300,000 in year 2, $200,000 in year 3, and $50,000 in years 4 and5. Which of the following is true?
a. The two projects have NPVs that are equally sensitive to changes in the cost of capital.
b. Neither project's NPV is sensitive to changes in the cost of capital.
c. The NPV of project B will be more sensitive to changes in the cost of capital compared to the NPV of project A.
d. The NPV of project A will be more sensitive to changes in the cost of capital compared to the NPV of project B
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Projects A and B both require an initial investment of $100,000. Project A produces $200,000 in cash...
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