1. Consider the two cash fl ow diagrams given in Figure 4.5. Both alternatives are one-shot investments. As such, we cannot predict what investment alternatives might be available in the future. However, the minimum attractive rate of return, 15 percent, refl ects the opportunity to reinvest recovered capital. Which alternative is preferred?

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(-) (+) 0 $6000 $5000 $3500 $3500 $3500 $4500 $4000 $3000 $2000 $1000 1 2 3 4 0 1 2 3 4 5 9 $4000 Alternative 1 MARR = 15% $5000 Alternative 2