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Which of the following investments has a higher present value, assuming both have the same positive discount rate? LO2 Year Investment A Investment B 1
Which of the following investments has a higher present value, assuming both have the same positive discount rate? LO2
| Year | Investment A | Investment B |
|---|---|---|
| 1 | $10,000 | $2,000 |
| 2 | $6,000 | $6,000 |
| 3 | $2,000 | $10,000 |
Which of the following investments has a higher present value, assuming both have the same positive discount rate? LO2
| Year | Investment A | Investment B |
|---|---|---|
| 1 | $10,000 | $2,000 |
| 2 | $6,000 | $6,000 |
| 3 | $2,000 | $10,000 |
A. No comparison can be made unless we know the discount rate for both investments.
B. Both offer the same present value because the sum of the cash flows are identical.
C. Investment A offers the higher present value.
D. Investment B offers the higher present value.
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