Use the same project information presented in question 3 but change the discount rate to 7 percent.

Question:

Use the same project information presented in question 3 but change the to 7 percent. Does the choice of which project to work on change?
Project 1 costs, Year 1 through Year 4: $100,000; $10,000; $10,000; $10,000
Project 1 revenue: $0; $5,000; $50,000; $110,000
Project 2 costs, Year 1 through Year 4: $50,000; $20,000; $5,000; $5,000
Project 2 revenue: $0; $6,000; $70,000; $100,000
Project 3 costs, Year 1 through Year 4: $120,000; $15,000; $5,000; $5,000
Project 3 revenue: $2,000; $50,000; $100,000; $150,000
Project 4 costs, Year 1 through Year 4: $50,000; $50,000; $10,000; $10,000
Project 4 revenue: $5,000; $70,000; $70,000; $50,000 Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...