You are considering two investment options. In option A, you have to invest RM3000 now and RM1000 three years from now. In option B, you have to invest RM2500 now, RM1500 a year from now, and RM1000 three years from now. In both options, you will receive four annual income of RM2000 each. (You will get the first payment a year from now.) Which of these options would you choose based on (a) the conventional payback criterion, and (b) the present worth criterion, assuming 14% interest' Based on conventional payback period method, choose either (A/B/Both) B PW Option A PW Option B Based on PW analysis method, choose Option (A or B) 1950.0 1337.0 A Format : A X Format : 2838.9 Format : 5699.6 Format : A
You are considering two investment options. In option A, you have to invest RM3000 now and RM1000 three years from now. In option B, you have to invest RM2500 now, RM1500 a year from now, and RM1000 three years from now. In both options, you will receive four annual income of RM2000 each. (You will get the first payment a year from now.) Which of these options would you choose based on (a) the conventional payback criterion, and (b) the present worth criterion, assuming 14% interest' Based on conventional payback period method, choose either (A/B/Both) B PW Option A PW Option B Based on PW analysis method, choose Option (A or B) 1950.0 1337.0 A Format : A X Format : 2838.9 Format : 5699.6 Format : A
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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Transcribed Image Text:You are considering two investment options.
In option A, you have to invest RM3000 now and RM1000 three years from now.
In option B, you have to invest RM2500 now, RM1500 a year from now, and RM1000 three years from now.
In both options, you will receive four annual income of RM2000 each. (You will get the first payment a year from now.)
Which of these options would you choose based on (a) the conventional payback criterion, and (b) the present worth criterion, assuming 14% interest?
Based on conventional payback period method, choose either (A/B/Both) B
PW Option A
PW Option B
Based on PW analysis method, choose Option (A or B)
1950.0
1337.0
A
Format : A
X Format: 2838.9
Format: 5699.6
Format : A
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