Project A is expected to generate positive cash flow of $1 million in

Project A is expected to generate positive cash flow of $1 million in 10 years while Project B is
expected to generate $500,000 in 5 years. Therefore

A) Project B may be preferred to Project A if the opportunity cost of money is high enough.
B) Both projects have equal value because they average $100,000 per year.
C) Project B is preferred because its cash flow is expected to be received sooner than the cash
flow from Project A.
D) Project A is preferred because shareholder value is based on cash flow.

ANSWER

A