Emily has $100,000 that she wants to invest and is considering the following two options:

• Option A: Investment in Redbird Mutual Fund, which is expected to produce interest income of $8,000 per year.
• Option B: Investment in Cardinal Limited Partnership (buys, sells, and operates wine vineyards). Emily's share of the partnership's ordinary income and loss over the next three years would be as follows:

• Year	Income (Loss)
  1	($8,000)
  2	(2,000)
  3	34,000

Emily is interested in the after-tax effects of these alternatives over a three-year horizon. Assume that Emily's investment portfolio produces ample passive activity income to offset any passive activity losses that may be generated. Her cost of capital is 8%, and she is in the 32% tax bracket. The two investment alternatives possess equal growth potential and comparable financial risk.

The present value factors at 8% are: Year 1: 0.9259, Year 2: 0.8573, and Year 3: 0.7938.

a. Based on these facts, compute the present value of these two investment alternatives. Round the present value (PV) to the nearest dollar.

Option A
	Income (Loss)		Tax Cost/ Benefit		After-Tax Benefit		Present Value
Year 1	$8,000		$		$		$
Year 2	8,000		$		$		$
Year 3	8,000		$		$		$
Total present value							$
Option B
	Income (Loss)		Tax Cost/ Benefit		After-Tax Benefit		Present Value
Year 1	($8,000)		$		$		$
Year 2	(2,000)		$		$		$
Year 3	34,000		$		$		$
Total present value							$