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Assume that potential projects X, Y and Z will each pay a total of $100,000 over 20 years. X pays $8,000 per year for 10 years and $2,000 per year for 10 years. Y pays $2,000 per year for 10 years and $8,000 per year for 10 years. Z pays $5,000 per year for 20 years. Which project is likely to be most attractive to an investor?A. The projects have equal total cash flows and are likely to be equally attractive.
B. The project with equal cash flows each year is likely to be most attractive.
C. The project with large cash flows early is likely to be most attractive.
D. The project with large cash flows later is likely to be most attractive.

Respuesta :

Answer: C

Explanation: If investors want money, they are going to like the project with the most money so they are most likely to pick the project that raises the most money. Which is Project X.