Alfarsi Industries uses the net present value method to make investment decisions and requires a...
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Accounting
Alfarsi Industries uses the net present value method to make investment decisions and requires a 15% annual return on all investments. The company is considering two different investments. Each require an initial investment of $14,800 and will produce cash flows as follows:
End of Year
Investment
A
B
1
$
9,200
$
0
2
9,200
0
3
9,200
27,600
The present value factors of $1 each year at 15% are:
1
0.8696
2
0.7561
3
0.6575
The present value of an annuity of $1 for 3 years at 15% is 2.2832 The net present value of Investment A is:
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