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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 $14,700 and will produce cash flows as follows:   End of Year Investment A B 1 $ 9,300   $ 0   2   9,300     0   3   9,300     27,900       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:   Multiple Choice   $(18,344).   $8,679.   $3,644.   $46,244.   $13,200

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 $14,700 and will produce cash flows as follows:   End of Year Investment A B 1 $ 9,300   $ 0   2   9,300     0   3   9,300     27,900       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:   Multiple Choice   $(18,344).   $8,679.   $3,644.   $46,244.   $13,200

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 $14,700 and will produce cash flows as follows:
 

End of
Year		 Investment
A B
1 $ 9,300   $ 0  
2   9,300     0  
3   9,300     27,900  
 

 
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:

 

Multiple Choice
  •  

    $(18,344).

  •  

    $8,679.

  •  

    $3,644.

  •  

    $46,244.

  •  

    $13,200

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