Question
Lets suppose you are offered a choice between two investments - Option A and Option B. Both investments have identical future cash flows. Option A
Lets suppose you are offered a choice between two investments - Option A and Option B. Both investments have identical future cash flows. Option A has a discount rate of 6%, and Option B has a discount rate of 7%. Which of the following statements is true?
The present value of cash flows in Option A is equal to the present value of cash flows in Option B.
The present value of cash flows in Option A is lower than the present value of cash flows in Option B.
The present value of cash flows in Option A is higher than the present value of cash flows in Option B.
No comparison can be madewe need to know the cash flows to calculate the present value.
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Intermediate Financial Management
Authors: Brigham, Daves
10th Edition
978-1439051764, 1111783659, 9780324594690, 1439051763, 9781111783655, 324594690, 978-1111021573
