Suppose that you have $16,000 to invest and you are trying to decide between investing in project A or project B. If you investin project A, you will receive a payment of $19,000 at the end of 3 years. If you invest in project B, you will receive a payment of $48.000 at the end of 21 years. The annual interest rate is 5 percent and both projects carry no risk. Instructions: Round your answers to the nearest dollar. Do not round your intermediate calculations. a. What is the present value of each project? Enter your answers in the table below. Project A Project B Present Value $ $ b. Which project will you choose for your investment? O Project A O Project B

Suppose that you have $16,000 to invest and you are trying to decide between investing in project A or project B. If you investin project A, you will receive a payment of $19,000 at the end of 3 years. If you invest in project B, you will receive a payment of $48.000 at the end of 21 years. The annual interest rate is 5 percent and both projects carry no risk. Instructions: Round your answers to the nearest dollar. Do not round your intermediate calculations. a. What is the present value of each project? Enter your answers in the table below. Project A Project B Present Value $ $ b. Which project will you choose for your investment? O Project A O Project B

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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