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Consider projects A and B. Both projects require the same initial investment of $100 today, and both projects have expected cash inflow of $200 in
Consider projects A and B. Both projects require the same initial investment of $100 today, and both projects have expected cash inflow of $200 in one year. Project A's cash inflow is guaranteed. Project B's cash flow might be a little more or less than $200. Which of the following is true? 1. NPVs of both projects should be the same. The riskiness of the cash flows has no impact on their values. 2. Project A's NPV should be greater than project B's NPV. 3. Project B's NPV should be greater than project A's NPV.
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