A business has two investment choices. Alternative 1 requires an immediate outlay of

$1,500

and offers a return of

$6,000

in

nine

years. Alternative 2 requires an immediate outlay of

$7,800

in return for which

$700

will be received at the end of every six months for the next

nine

years. The required rate of return on investment is

7%

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.