The problem gives only the required rates of return for both projects and the lengths of both projects. Nothing in that information indicates that Investment B is a better choice than Investment A.
From the limited information given, this is the only conclusion that can be drawn. A higher required rate of return is used in capital budgeting when greater risk is perceived. The required rate of return is higher for Investment B than it is for Investment A. Therefore, we can conclude that Investment B has greater risk than Investment A.
The problem gives only the required rates of return for both projects and the lengths of both projects. Nothing in that information indicates that Investment A is a better choice than Investment B.
A higher required rate of return is used in capital budgeting when greater risk is perceived. Therefore, it is not correct to say that Investment A has greater risk than Investment B, because Investment A's required rate of return is lower than Investment B's, not higher.
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What is the most reasonable conclusion based on this limited information?