Daryl Kearns saved $270,000 during the 25 years that he worked for a major corporation. Now he has retired at the age of 50 and has begun to draw a comfortble pension check every month. He wants to ensure the financial security of his retirement by investing his savings wisely and is currently considering two investment opportunities. Both investments require an initial payment of $186.000. The following table presents the estimated cash inflows for the two alternatives: Year 55,715 58,860 $78,780 $101,270 102,500 108,900 17,400 Opportunity #1 Opportunity #2 15,400 M: Kearns decides to use his past average return on mutual fund investments as the discount rate: t is 9 percent. (PV ot $1 and PVAof $) (Use appropriate factor(s) from the tables provided.) Required a. Compute the net present value of each opportunity. Which should Mr. Kearns adopt based on the net present value approach? b. Compute the payback period for each opportunity. Which should Mr. Kearns adopt based on the payback approach? Complete this question by entering your answers in the tabs below. Required A Required B Compute the net present value of each opportunity. Which should Mr. Kearns adopt based on the net present value approach? (Round your intermediate calculations and final answer to two decimal places.) Net Present Value Onnortunity 2 8 Opportunity1 55,715 Opportunity #2 58,860 $78,780 $101,270 17,400 102,500 108.900 15,400 Mr. Kearns decides to use his past average return on mutual fund investments as the discount rate; it is 9 percent. (PV of $1 and PVA of ts $1) (Use appropriate factor(s) from the tables provided.) Required a. Compute the net present value of each opportunity. Which should Mr. Kearns adopt based on the net present value approach? b. Compute the payback period for each opportunity. Which should Mr. Kearns adopt based on the payback approach? Complete this question by entering your answers in the tabs below Required A Required B Compute the net present value of each opportunity approach? (Round your intermediate calculations and final answer to two decimal places.) . Which should Mr. Kearns adopt based on the net present value Net Present Value Required B> opportunity # Opportunity #2 ty 1 $ 55,715 58,860 $78,780 101,270 17,400 108,900 15,400 Mr. Kearns decides to use his past average return on mutual fund investments as the discount rate; it is 9 percent. (PV of $1 and PVA of $1) (Use appropriate factor(s) from the tables provided.) Required a. Compute the net present value of each opportunity. Which should Mr. Kearns adopt based on the net present value approach? b. Compute the payback period for each opportunity. Which should Mr. Kearns adopt based on the payback approach? Complete this question by entering your answers in the tabs below. Required A Required B Compute the payback period for each opporn which should M, Kearns adopt based on the Payback approach? Pa years Which opportunity should be chosen? K Required A
