Which one of the following would result highest net present value a series of cash flows?

a) 100 decreases taxes in each year for 4 years

b) 100 decreases taxes in each year for 3 years

c) 100 disposal value at the end of 4 years

d) 100 increase in cash flow in 3 years

Answer A is correct. Please explain....

The 100 decrease in taxes in each year is the most advantageous becuase it offers $100 in each of the 4 years.

It is better than (b) becuase it is for all 4 years. The 4th year is the difference.

It is better than (c) because the 100 will only be attributable to the fourth year not to each of the years.

It is better than (d) for the same reason that it is better than choice (b).

Hope this helps.

Its makes sense...

Thanks and regards.

Benny

Great response!