Final answer:
A high discount rate tends to favor the investment with large cash flows early, because the present value of future cash inflows is reduced more significantly at higher discount rates.
Step-by-step explanation:
The question revolves around the concept of discounting cash flows and how the discount rate affects the value of investments with different cash flow timing. When considering three investments with equal lives but different timings of cash flows, a high discount rate would generally favor the investment with large cash flows early (option a).
This is because a higher discount rate would reduce the present value of cash flows received in the future more significantly, making those early payments more valuable in comparison to later ones.
The principle of time value of money is that a dollar today is worth more than a dollar tomorrow, which is particularly impactful when discount rates are high.