A company facing an interest rate of 8% must choose among projects offering the following four-year cash flows. If the company is employing the net present value criterion, which project should they choose?
A. $25,000 in year 1; $15,000 in year 2; $10,000 in year 3; and $5,000 in year 4
B. $5,000 in year 1; $5,000 in year 2; $20,000 in year 3; and $30,000 in year 4
C. $15,000 in year 1; $15,000 in year 2; $15,000 in year 3; and $15,000 in year 4
D. $5,000 in year 1; $5,000 in year 2; $25,000 in year 3; and $25,000 in year 4
Answer:C
A company facing an interest rate of 8% must choose among projects offering the following four-year cash flows. If the company is employing the net present value criterion, which project should they choose?
A. $25,000 in year 1; $15,000 in year 2; $10,000 in year 3; and $5,000 in year 4 B. $5,000 in year 1; $5,000 in year 2; $20,000 in year 3; and $30,000 in year 4 C. $15,000 in year 1; $15,000 in year 2; $15,000 in year 3; and $15,000 in year 4 D. $5,000 in year 1; $5,000 in year 2; $25,000 in year 3; and $25,000 in year 4