Alberta Inc. is considering investing in two projects, each of which has an initial investment requirement of \( \S 100,000 ). Both A and B are "normal" risk for the company. A has a net present value of \(\$ 25,000 ). B has a net present value of \(\$ 20,000 \). None of the answers provided \(A) and \(B\) are equally valuable. \(A) is better than \(B) because it has a higher net present value and the same risk level. \(B\) is better than \(A \) because of the risk. There is insufficient information to make a rational choice between A and B.
Alberta Inc. is considering investing in two projects, each of which has an initial investment requirement of \( \S 100,000 ). Both A and B are "normal" risk for the company. A has a net present value of \(\$ 25,000 ). B has a net present value of \(\$ 20,000 \). None of the answers provided \(A) and \(B\) are equally valuable. \(A) is better than \(B) because it has a higher net present value and the same risk level. \(B\) is better than \(A \) because of the risk. There is insufficient information to make a rational choice between A and B.
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter12: Capital Budgeting: Decision Criteria
Section: Chapter Questions
Problem 11P
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![Alberta Inc. is considering investing in two projects, each of which has an initial investment requirement of \(\$ 100,000 \). Both A and B are "normal" risk for the company. A has a net present value of \( \$ 25,000 \). B has
a net present value of \( \$ 20,000 \).
None of the answers provided
\(A \) and \(B \) are equally valuable.
\(A \) is better than \(B \) because it has a higher net present value and the same risk level.
\(B \) is better than \(A \) because of the risk.
There is insufficient information to make a rational choice between A and B.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F0cfdbee5-edec-471d-b820-a938a8aae01f%2F556371eb-df43-439a-a094-60da7d064a47%2F0xvpdr9_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Alberta Inc. is considering investing in two projects, each of which has an initial investment requirement of \(\$ 100,000 \). Both A and B are "normal" risk for the company. A has a net present value of \( \$ 25,000 \). B has
a net present value of \( \$ 20,000 \).
None of the answers provided
\(A \) and \(B \) are equally valuable.
\(A \) is better than \(B \) because it has a higher net present value and the same risk level.
\(B \) is better than \(A \) because of the risk.
There is insufficient information to make a rational choice between A and B.
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