49. Roman Knoze is considering two investments. Each will cost $20,000 initially. Project 1 will return annual cash flows of $10,000 in each of three years. Project 2 will return $5,000 in year 1, $10,000 in year 2, and $15,000 in year 3. Roman requires a minimum rate of return of 10%. What is the net present value of Project 2? Would the project be accepted or rejected? Hint: Refer to present value tables.

a.

$24,070 and accept

b.

$20,000 and accept

c.

$5,670 and reject

d.

$2,530 and reject

e.

$4,070 and accept