company has a policy of requiring a rate of return on investment of 16%. two investment alternatives are available but the company may choose only one. Alternative 1 offers a return of $55,000 at the end of year five, $75,000 at the end of year nine and $50,000 after eleven years. Alternative 2 will return the company $1,100 at the end of each month for the next eleven years. compute the present value of each alternative and determine the preferred alternative according to the discounted cash flow ceiterion. 1. The presebt value of alternative 1 is: 2: the present value of alternative 2 is: the prefer choice is:
company has a policy of requiring a rate of return on investment of 16%. two investment alternatives are available but the company may choose only one. Alternative 1 offers a return of $55,000 at the end of year five, $75,000 at the end of year nine and $50,000 after eleven years. Alternative 2 will return the company $1,100 at the end of each month for the next eleven years. compute the present value of each alternative and determine the preferred alternative according to the discounted cash flow ceiterion. 1. The presebt value of alternative 1 is: 2: the present value of alternative 2 is: the prefer choice is:
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
Section: Chapter Questions
Problem 1PS
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a company has a policy of requiring a rate of return on investment of 16%. two investment alternatives are available but the company may choose only one. Alternative 1 offers a return of $55,000 at the end of year five, $75,000 at the end of year nine and $50,000 after eleven years. Alternative 2 will return the company $1,100 at the end of each month for the next eleven years. compute the present value of each alternative and determine the preferred alternative according to the discounted cash flow ceiterion.
1. The presebt value of alternative 1 is:
2: the present value of alternative 2 is:
the prefer choice is:
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