A company has two investment possibilities, with the following cash inflows: Investment Year 1 Year 2 Year 3 A $1,500 1,900 2,200 B $1,400 1,400 1,400 If the firm can earn 6 percent in other investments, what is the present value of investments A and B? Use Appendix B and Appendix D to answer the question. Round your answers to the nearest dollar. PV(Investment A): $   PV(Investment B): $   If each investment costs $4,000, is the present value of each investment greater than the cost of the investment? The present value of investment A is -Select-less than greater than Item 3 the cost. The present value of investment B is -Select-less than greater than Item 4 the cost.

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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A company has two investment possibilities, with the following cash inflows:

Investment Year 1 Year 2 Year 3
A $1,500 1,900 2,200
B $1,400 1,400 1,400

If the firm can earn 6 percent in other investments, what is the present value of investments A and B? Use Appendix B and Appendix D to answer the question. Round your answers to the nearest dollar.
PV(Investment A): $  
PV(Investment B): $  

If each investment costs $4,000, is the present value of each investment greater than the cost of the investment?
The present value of investment A is -Select-less than greater than Item 3 the cost.
The present value of investment B is -Select-less than greater than Item 4 the cost.

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