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- Annual cash inflows from two competing investment opportunities are given below.
YEAR INVESTMENT A INVESTMENT B
1 $10,000 $ 20,000
2 15,000 10,000
3 20,000 35,000
4 45,000 25,000
Total Cash Inflows $90,000 $90,000
Each investment opportunity will require the same initial investment, $65,000.
The firms required rate of return on investments is 10%.
Required: (10 pts.)
- Compute the Net Present Value of each investment.
(2) Which investment should be made, and explain why.
[Indicate which Table you used and show all your work]
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