Assume that you can only invest in one of the three investments in problem 8.

a. Using the internal rates of return on the three investments, which is preferred?

b. Using the net present value method and a cost of money of 0.05, which is preferred?

Data from problem 8

Compute the net present value (use a cost of money of 0.15) and the internal rate of return for each of the following investments:

Transcribed Image Text:

Investment A B C 0 $(1,000) (1,000) (1,000) Period 1 $ 615 1,150 2 $1,322 615