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Sun Systems Company has two investment opportunities. Both investments cost $7,000 and will provide the same total future cash inflows. Sun Systems has a required

Sun Systems Company has two investment opportunities. Both investments cost $7,000 and will provide the same total future cash inflows. Sun Systems has a required (desired) rate of return of 6%. The cash receipts schedule for each investment is given below:

Investment 1 Investment 2
Period 1 $ 2,000 $ 2,000
Period 2 2,000 3,000
Period 3 2,000 4,000
Period 4 5,000 2,000

All other things being equal,

a. investment alternative 1 will produce a higher net present value than alternative 2.

b. investment alternative 2 will produce a higher net present value than alternative 1.

c. both investment opportunities will produce the same net present value.

d. The answer cannot be determined from the information provided.

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