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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 1 2 3 Investment A $ 9,200 9,200 9,200 27,600 The present value factors of $1 each year at 15% are: 1 2 3 The present value of an annuity of $1 for 3 years at 15% is 2.2832 The net present value of Investment B is: 0.8696 0.7561 0.6575 B $0

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 1 2 3 Investment A $ 9,200 9,200 9,200 27,600 The present value factors of $1 each year at 15% are: 1 2 3 The present value of an annuity of $1 for 3 years at 15% is 2.2832 The net present value of Investment B is: 0.8696 0.7561 0.6575 B $0

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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 1 2 3 Investment A $ 9,200 B $0 9,200 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 B is:
Transcribed Image Text: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 1 2 3 Investment A $ 9,200 B $0 9,200 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 B is:
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