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Projects A and B both last 4 periods. They are identical in all respects except their inventory. In particular, project A requires an inventory of 200 units in all periods 1-3, while project B requires an inventory of 100 units in periods 1 and 2 and 200 units in period 3. In both cases, any inventory left after period 3 will be sold in period 4. Which of the following is true? A. Project B requires more capital than project A B. Project A has a larger NPV than project B C. Project B has a larger NPV than project A D. Project A generates more income than project B

Projects A and B both last 4 periods. They are identical in all respects except their inventory. In particular, project A requires an inventory of 200 units in all periods 1-3, while project B requires an inventory of 100 units in periods 1 and 2 and 200 units in period 3. In both cases, any inventory left after period 3 will be sold in period 4. Which of the following is true? A. Project B requires more capital than project A B. Project A has a larger NPV than project B C. Project B has a larger NPV than project A D. Project A generates more income than project B

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Projects A and B both last 4 periods. They are identical in all respects except their inventory. In particular, project A requires an inventory of 200 units in all periods 1-3, while project B requires an inventory of 100 units in periods 1 and 2 and 200 units in period 3. In both cases, any inventory left after period 3 will be sold in period 4. Which of the following is true?


A. Project B requires more capital than project A


B. Project A has a larger NPV than project B


C. Project B has a larger NPV than project A


D. Project A generates more income than project B

 

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