Two government projects have the following benefit profiles:

-Which of the following statements is accurate?
A) Because the combined benefits of the two projects over the four years each equals 160,000, the net present value of the projects will be equal.
B) Because the sum of benefits 160,000) exceeds the investment cost 100,000) for both projects, the net present value of both projects will always be positive.
C) The net present value of Project A becomes negative at a higher discount rate than does the net present value of Project B
D) The net present value of Project B becomes negative at a higher discount rate than does the net present value of Project A

Question

Two government projects have the following benefit profiles:

-Which of the following statements is accurate?
A) Because the combined benefits of the two projects over the four years each equals 160,000, the net present value of the projects will be equal. 
B) Because the sum of benefits 160,000) exceeds the investment cost 100,000) for both projects, the net present value of both projects will always be positive. 
C) The net present value of Project A becomes negative at a higher discount rate than does the net present value of Project B 
D) The net present value of Project B becomes negative at a higher discount rate than does the net present value of Project A

Quizplus · Accepted Answer

The Answer is D

Two Government Projects Have the Following Benefit Profiles