Investment X and Investment Y Are Both Growing Perpetuities with Initial

Multiple Choice

Investment X and Investment Y are both growing perpetuities with initial cash flow of $100.Both investments have the same interest rate (r) .The present value of Investment X is $5,000,while the present value of Investment Y is $4,000.Which of the following is TRUE?

A) Investment X has a higher growth rate than Investment Y.
B) Investment X has a lower growth rate than Investment Y.
C) Investment X has the same growth rate as Investment Y.
D) The answer cannot be determined without knowing the interest rate for both investments.
E) This makes no sense-with the same initial cash flow and the same interest rate Investment X and Investment Y should have the same present value.