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A company must make a choice between two investment alternatives. Alternative 1 will return the company $20000 at the end of 2 years and $50000
A company must make a choice between two investment alternatives. Alternative 1 will return the company $20000 at the end of 2 years and $50000 at the end of 7 years. Alternative 2 will return the company $9000 at the end of each of the next 7 years. The company normally expects to earn a rate of return of 6% on funds invested. Compute the present value of each alternative and determine the preferred alternative according to the discounted cash flow criterion.
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