7. Suppose the present value of cash ins and outs is very close to balanced for a project to build a new $50 million factory, so that the NPV is $25,000. The same company is thinking about buying a new trailer truck for $150,000. The NPV of projected cash flows associated with the truck is also about $25,000. Does this mean that the two projects are comparable? Is one more desirable than the other?

If the cash flows have similar risks, are the projects equally risky? (Hint: Think in terms of the size of the investment placed at risk in relation to the financial rewards expected.)