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Problem 7-24

A firm must choose between two investment alternatives, each costing $115,000. The first alternative generates $35,000 a year for four years. The second pays one large lump sum of $156,900 at the end of the fourth year. If the firm can raise the required funds to make the investment at an annual cost of 8 percent, what are the present values of two investment alternatives? Use Appendix B and Appendix D to answer the question. Round your answers to the nearest dollar. PV_{(First alternative)}: $ PV_{(Second alternative)}: $

Which alternative should be preferred? The -Select-firstsecondItem 3 alternative should be preferred.