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ABC Company is evaluating two investment options: Option A requires an initial investment of $100,000 and offers cash inflows of $20,000 annually for 6 years.
ABC Company is evaluating two investment options:
Option A requires an initial investment of $100,000 and offers cash inflows of $20,000 annually for 6 years.
Option B requires an initial investment of $150,000 and offers cash inflows of $25,000 annually for 8 years.
Create a table comparing the net present value (NPV) of both options at discount rates of 8% and 10%.
Investment Option | Initial Investment | Cash Inflows (annually) | Maturity (Years) | Discount Rate (%) | NPV (at 8%) | NPV (at 10%) |
Option A | $100,000 | $20,000 | 6 | 8 | ||
Option B | $150,000 | $25,000 | 8 | 8 |
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