Consider the timing of the profits of the following certain investment projects: Profit
L S
Year 1 $ 0 $ 3000
Year 2 $ 3000 $ 0
A) Project S is preferred to Project L.
B) Project L is preferred to Project S.
C) Projects S and L are equally desirable.
D) A goal of profit maximization would favor Project S only.

Question

Quizplus · Accepted Answer

Project S is preferred because it provides an immediate return in Year 1, aligning with the time value of money principle where earlier returns are more valuable.

Consider the Timing of the Profits of the Following Certain