Response to the following problem:
John Marshall is employed as a bank loan officer for First State Bank. He is comparing two companies that have applied for loans, and he wants your help in evaluating those companies. The two companies-Morris, Inc., and Walker Company-are approximately the same size and had approximately the same cash balance at the beginning of 2009.
Because the total cash flows for the three-year period are virtually the same, John is inclined to evaluate the two companies as equal in terms of their desirability as loan candidates.