#9

Investment A: Year: Cash flow: 0 - $14,000 1 $4,000 2 $4,000 3 $4,000 5 $4,000 $4,000 Investment B: Year: Cash flow: 0 - $15,000 1 $7,000 2 $7,000 3 $7,000 4 $7,000 5 $7,000 4 Investment C: Year: 0 1 2 3 5 Cash flow: - $18,000 $12,000 $3,500 $3,500 $3,500 $3,500 The cash flows for three projects are shown above. The cost of capital is 8.5%. If an investor decided to take projects with a payback period two years or less, which of these projects would he take? A. Investment A B. Investment B C. Investment OD. none of these investments