Question
You have the choice to invest into the following two alternatives. Your budget is $1,000 and you have typical investor preferences meaning that you prefer
You have the choice to invest into the following two alternatives. Your budget is $1,000 and you have typical investor preferences meaning that you prefer a safe dollar today compared to a risky dollar tomorrow.
| Year 0 | Year 1 | Year 2 | Year 3 | Year 4 | |
| Alternative A | (800) | 300 | 350 | 300 | 250 |
| Alternative B | (800) | 150 | 200 | 250 | 600 |
Which of the following statements is true? More than one statement can be true. No RRR, and no calculations are necessary.
| A. | Alternative A is more attractive to you. | |
| B. | Both alternatives are equally attractive to you. | |
| C. | Both alternatives would show the same NPV if the discount rate was 0%. | |
| D. | Alternative B is more attractive to you. |
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Accounting concepts and applications
Authors: Albrecht Stice, Stice Swain
11th Edition
978-0538750196, 538745487, 538750197, 978-0538745482
