A company must make a choice between two investment alternatives. Alternative 1 will return the company $15,00 at the end of three years and $70,000 at the end of seven years. Alternative 2 will return the company $12,000 at the end of the next seven years. The company normally expects to earn a rate of return of 18% on funds invested. Compute the present value of each alternative and determine the preferred alternative according to the discounted cash flow criterion.

Answers...

The PV of Alternative 1 is $31.104

The PV of Alternative 2 is $45.738

The preferred alternative is Alternative 2

would like to know how to get to these answers. Thank you