Construct a choice table for interest rates

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A firm is considering the following alternatives, as well as a fifth choice: do nothing. Each alternative has a 5-year useful life.

1

2

3

4

Initial cost             $100,000

$130,000

$200,000

$330.000

Uniform annual net income ($000s)                       26.38

 

38.78

47.48

91.55

Rate of return             10%

15%

6%

12%

(a) Construct a choice table for interest rates from 0% to 100%.

(b) The firm's minimum attractive rate of return is 8%. Which alternative should be selected?

Reference no: EM131133302

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