A company must make a choice between two investment alternatives. Alternative 1 will return the company $22,000
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Question:
A company must make a choice between two investment alternatives. Alternative 1 will return the company $22,000 at the end of two years and$40,000 at the end of eight years. Alternative 2 will return the company $6,000 at the end of each of the next eight years. The company normally expects to earn a rate of return of 15% on funds invested. Compute the present value of each alternative and determine the preferred alternative according to the discounted cash flow criterion.
The present value of Alternative 1 is ______
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