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S6,000 $5,000 $4,500 $4,000 $3,500 $3,500 $3,500 $3,000 $2,000 S1,000 (+) 3 2 3 4 6. Years Years (-) Alternative I Alternative 2 $4,000 MARR = 15% $5,000

S6,000 $5,000 $4,500 $4,000 $3,500 $3,500 $3,500 $3,000 $2,000 S1,000 (+) 3 2 3 4 6. Years Years (-) Alternative I Alternative 2 $4,000 MARR = 15% $5,000

Essentials Of Investments
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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Consider the two cash flow diagrams given in Figure. Both alternatives are one-shot investments. As such, we cannot predict what investment alternatives might be available in the future. However, the minimum attractive rate of return, 15%, reflects the opportunity to reinvest recovered capital. Which alternative is preferred?

S6,000 $5,000 $4,500 $4,000 $3,500 $3,500 $3,500 $3,000 $2,000 S1,000 (+) 3 2 3 4 6. Years Years (-) Alternative I Alternative 2 $4,000 MARR = 15% $5,000
Transcribed Image Text:S6,000 $5,000 $4,500 $4,000 $3,500 $3,500 $3,500 $3,000 $2,000 S1,000 (+) 3 2 3 4 6. Years Years (-) Alternative I Alternative 2 $4,000 MARR = 15% $5,000
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