Which one of the following statements is correct given the following two sets of

ID: 2708281 • Letter: W

Question

Which one of the following statements is correct given the following two sets of project cash flows?

Project A Project B

Year 1 $6,000 $2,000

Year 2 $ 0 $3,000

Year 3 $2,500 $3,000

Year 4 $2,500 $3,000

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 zero given a positive discount rate

C. The present value at time zero of the final cash flow for Project A will be discounted using an exponent of three

D. The present value of Project A cannot be computed because the second cash flow is equal to zero

E. As long as the discount rate is positive, Project B will always be worth less today than will Project A

C. The present value at time zero of the final cash flow for Project A will be discounted using an exponent of three

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