Question
Project A has cash inflows in years 1-3 of $100, $200, and $300, respectively. Project B has cash inflows in years 1-3 of $300, $200,
Project A has cash inflows in years 1-3 of $100, $200, and $300, respectively. Project B has cash inflows in years 1-3 of $300, $200, and $100, respectively. Both projects have identical initial outlays and a length of 3 years. As the cost of capital increases, which of the following is true?
A. Project A becomes relatively more attractive (in terms of NPV) than project B
B. Project B becomes relatively more attractive (in terms of NPV) than project A
C. There is no change in the relative attractiveness of the two projects
D. Need to know the initial outlay to determine
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