1. A business has two investment choices. Alternative 1 requires an immediate outlay of $2,200 and offers a return of $5,500 in seven years. Alternative 2 requires an immediate outlay of $6,400 in return for which $700 will be received at the end of every six months for the next seven years. The required rate of return on investment is 8% semi-annually. Compute the net present value of each alternative and determine which investment should be accepted or rejected according to the net present value criterion.

What is the present value of Alternative 1 (Round the final answer to the nearest dollar as needed. Round all intermediate values to six decimal places as needed.)

Part 2 What is the present value of Alternative 2? (Round the final answer to the nearest dollar as needed. Round all intermediate values to six decimal places as needed.)

Part 3 What is the preferred alternative?