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nts. what is the NPV of Alternative B?

nts. what is the NPV of Alternative B?

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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Cambrian College has to choose between two investment alternatives. Alternative A (a new residence) will provide returns to the college of $30.000 after 2 years, $20,000 after 3 years and $10,000 after 4 years. Only $2000 per year is made in years five and six. Alternative B(a new gym) will bring returns of $11,000 per year for 6 years. If the college expects a return of 9% compounded annually on investments, what is the NPV of Alternative B? Select one: a. $27,034 b. $27,879 C. $50,271 d. $49,345
Transcribed Image Text:Cambrian College has to choose between two investment alternatives. Alternative A (a new residence) will provide returns to the college of $30.000 after 2 years, $20,000 after 3 years and $10,000 after 4 years. Only $2000 per year is made in years five and six. Alternative B(a new gym) will bring returns of $11,000 per year for 6 years. If the college expects a return of 9% compounded annually on investments, what is the NPV of Alternative B? Select one: a. $27,034 b. $27,879 C. $50,271 d. $49,345
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