A company must make a choice between two investment alternatives. Alternative 1 will return the company $33,000 at the end oftwo years and $70,000 at the end of seven years. Alternative 2 will return the company $8,000 at the end of each of the next sevenyears. The company normally expects to earn a rate of return of 10% on funds invested. Compute the present value of eachalternative and determine the preferred alternative according to the discounted cash flow criterion.The present value of Alternative 1 is S(Round the final answer to the nearest dollar as needed. Round all intermediate values to six decimal places as needed.)The present value of Alternative 2 is S(Round the final answer to the nearest dollar as needed. Round all intermediate values to six decimal places as needed.)The preferred alternative isAlternative 1.Alternative 2.

Present value of cash flows is based on the concept of time value of money. Time value of money is…

The present value of Alternative 1 is S (Round the final answer to the nearest dollar as needed. Round all intermediate values to six decimal places as needed.) The present value of Alternative 2 is S. (Round the final answer to the nearest dollar as needed. Round all intermediate values to six decimal places as needed.) The preferred alternative is

The present value of Alternative 1 is S (Round the final answer to the nearest dollar as needed. Round all intermediate values to six decimal places as needed.) The present value of Alternative 2 is S. (Round the final answer to the nearest dollar as needed. Round all intermediate values to six decimal places as needed.) The preferred alternative 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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the question is in the attached image.
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