Question
Harold Coop is considering investing in either ABC or ZYX. Both investments ABC and ZYX cost $12,000. In order to make the purchase, Harold Coop
Harold Coop is considering investing in either ABC or ZYX. Both investments ABC and ZYX cost $12,000. In order to make the purchase, Harold Coop needs to obtain a loan from the bank at an interest rate of 6%. The bank is only willing to offer Harold Coop $12,000. The following table outlines the expected net cash flows from each investment.
Year | ABC | ZYX |
1 | $700 | $15,300 |
2 | $1,400 | $1,600 |
3 | $3,200 | $3,200 |
4 | $7,800 | $1,200 |
5 | $9,100 | $900 |
Total | $22,200 | $22,200 |
Based on the NPV method, which investment should Harold Coop purchase? Do not enter dollar signs or commas in the input boxes. Use the negative sign for a negative NPV. Use the PV tables in the appendix of the textbook. Round your answers to the nearest whole number. NPV of Investment ABC: $Answer NPV of Investment ZXY: $Answer Better Investment: AnswerABCZYX
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