A company intends to invest in a new painting hall. There are two complete investment options, Alt A and alt B. These two options are listed below: Alt A 2600 Alt B Basic investment 1800 Payment surplus year 1 Payment surplus year 2 Payment surplus year 3 Payment surplus year 4 Payment surplus year 5 Payment surplus year 6 Payment surplus year 7 Payment surplus year 8 470 470 470 470 470 470 410 410 410 410 410 410 470 470 Residual value after year 6 I Residual value after year 8 60 All amounts in thousands of kronor! Option A has a lifespan of 8 years and Option B of 6 years. The discount rate is 8%. Show three relevant ways to compare investments. Write these clearly under points 1, 2 and 3. Calculate and explain why you used each calculation method! Choose options and motivate!

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 intends to invest in a new painting hall. There are two complete investment options, Alt A
and alt B. These two options are listed below:
Alt A
2600
Alt B
Basic investment
1800
Payment surplus year 1
Payment surplus year 2
Payment surplus year 3
Payment surplus year 4
Payment surplus year 5
Payment surplus year 6
Payment surplus year 7
Payment surplus year 8
470
470
470
470
470
470
410
410
410
410
410
410
470
470
Residual value after year 6
I
Residual value after year 8
60
All amounts in thousands of kronor!
Option A has a lifespan of 8 years and Option B of 6 years. The discount rate is 8%.
Show three relevant ways to compare investments. Write these clearly under points 1, 2 and 3.
Calculate and explain why you used each calculation method! Choose options and motivate!
Transcribed Image Text:A company intends to invest in a new painting hall. There are two complete investment options, Alt A and alt B. These two options are listed below: Alt A 2600 Alt B Basic investment 1800 Payment surplus year 1 Payment surplus year 2 Payment surplus year 3 Payment surplus year 4 Payment surplus year 5 Payment surplus year 6 Payment surplus year 7 Payment surplus year 8 470 470 470 470 470 470 410 410 410 410 410 410 470 470 Residual value after year 6 I Residual value after year 8 60 All amounts in thousands of kronor! Option A has a lifespan of 8 years and Option B of 6 years. The discount rate is 8%. Show three relevant ways to compare investments. Write these clearly under points 1, 2 and 3. Calculate and explain why you used each calculation method! Choose options and motivate!
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