Using the net present value method the total present value of cash inflows for Project A is $30000 and the total present value of cash inflows of Project B is $35000. If Project A and Project B both require an initial investment of $30000 and have the same economic life the project that should be accepted is
A) Project A.
B) Project B.
C) neither; they are both the same.
D) not capable of being calculated.

Question

Quizplus · Accepted Answer

Project B has a higher total present value of cash inflows than Project A, which means it has a higher net present value. Therefore, Project B should be accepted.

Using the Net Present Value Method the Total Present Value