Consider the after-tax cash flows for Project S and Project L: Project

Consider the after-tax cash flows for Project S and Project L:
Project S Project L
Year 1 $3000 0
Year 2 0 $3000
A rational person would prefer ________.

A) Project L because they can avoid taxes by receiving cash flows later
B) Project S because the money can be reinvested sooner
C) information about profits instead of cash flows
D) neither investment over the other

ANSWER

B