Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Given the information of returns from investment A and Investment B. Please make a choice between A and B based on each table. If there

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Given the information of returns from investment A and Investment B. Please make a choice between A and B based on each table. If there are conflicts, what will be your final decision and corresponding supportive explanations (35). IE Table 1 Net revenues ($) Year Investment A Investment B 1 2 3 4 5 3,000 3,000 3,000 3,000 3,000 1,000 2,000 3,000 4,000 6,000 Total cash revenues Less initial investment Net Cash Revenues 15,000 - 10,000 5,000 16,000 -10,000 6,000 1,000 1,200 Average net revenue/yr Table 2 Investment A Investment B Net cash flow ($) Present value factor Present value ($) Net cash flow ($) Present value factor Present value ($) Year 1 3 NAN 3,000 3,000 3,000 3,000 3,000 0.9090 0.8260 0.7510 0.6830 0.6210 2,727 2,478 2,253 2,049 1,863 11,370 10,000 1,370 15.2% 1,000 0.9090 909 2,000 0.8260 1,652 3,000 0.7510 2,253 4,000 0.6830 2,732 6,000 0.6210 3,726 Total 11,272 Less initial cost 10,000 Net present value 1,272 Internal rate of return 13.8% Total Less initial cost Net present value Internal rate of retum Investment A Investment B Net cash revenue Debt payment Net cash flow Year Net cash revenue Debt payment Net cash flow 1 2 3 4 5 3,000 3,000 3,000 3,000 3,000 2,800 2,640 2,480 2,320 2,160 200 360 520 680 840 1,000 2,000 3,000 4,000 6,000 2,800 2,640 2,480 2,320 2,160 -1,800 640 520 1,680 3,840

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Personal Finance

Authors: Elizabeth B. Goldsmith

1st Edition

0534544959, 9780534544959

More Books

Students also viewed these Finance questions

Question

Did you add the logo at correct size and proportion?

Answered: 1 week ago

Question

Did you ask for action?

Answered: 1 week ago