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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 $15,400 and will produce cash flows as follows:   End of Year Investment A B 1 $ 8,400   $ 0   2   8,400     0   3   8,400     25,200       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: Back

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 $15,400 and will produce cash flows as follows:   End of Year Investment A B 1 $ 8,400   $ 0   2   8,400     0   3   8,400     25,200       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: Back

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 $15,400 and will produce cash flows as follows:
 

End of
Year		 Investment
A B
1 $ 8,400   $ 0  
2   8,400     0  
3   8,400     25,200  
 

 
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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