Question
Delta Airlines is evaluating two investment options: Option A requires an initial investment of $200,000 and generates cash inflows of $50,000 annually for 5 years.
Delta Airlines is evaluating two investment options:
Option A requires an initial investment of $200,000 and generates cash inflows of $50,000 annually for 5 years.
Option B requires an initial investment of $300,000 and generates cash inflows of $70,000 annually for 7 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 Flows (annually) | Maturity (Years) | Discount Rate (%) | NPV (at 8%) | NPV (at 10%) |
Option A | $200,000 | $50,000 | 5 | 8 | ||
Option B | $300,000 | $70,000 | 7 | 8 |
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