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A business has two investment choices. Alternative 1 requires an immediate outlay of $3,000 and offers a return of $8,500 in seven years. Alternative 2
A business has two investment choices. Alternative 1 requires an immediate outlay of $3,000 and offers a return of $8,500 in seven years. Alternative 2 requires an immediate outlay of $4,000 in return for which $500 will be received at the end of every six months for the next seven years. The required rate of return on investment is 12% 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. ... The net present value of Alternative 1 is $ (Round the final answer to the nearest dollar as needed. Round all intermediate values to six decimal places as needed.) The net present value of Alternative 2 is $ (Round the final answer to the nearest dollar as needed. Round all intermediate values to six decimal places as needed.) The preferred alternative is Instructor tip You have to use the Effective Annual Rate when using CF. Close
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