Alfarsi industries uses the net present value method

Reference no: EM131023126

Alfarsi Industries uses the net present value method to make investment decisions and requires a 15% annual return on all investments. The company is considering two different investments. Each require an initial investment of $15,300 and will produce cash flows as follows:

End of Year	Investment
End of Year	A	B
1	$8,300	$0
2	8,300	0
3	8,300	24,900

The present value factors of $1 each year at 15% are:

1	0.8696
2	0.7561
3	0.6575

The present value of an annuity of $1 for 3 years at 15% is 2.2832

The net present value of Investment A is:

Answers:

$16,372.

$(15,300).

$9,600.

$(18,951).

$3,651.

Reference no: EM131023126

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