Question
Harold Coop is considering investing in either ABC or ZYX. Both investments ABC and ZYX cost $11,000. In order to make the purchase, Harold Coop
Harold Coop is considering investing in either ABC or ZYX. Both investments ABC and ZYX cost $11,000. In order to make the purchase, Harold Coop needs to obtain a loan from the bank at an interest rate of 8%. The bank is only willing to offer Harold Coop $11,000. The following table outlines the expected net cash flows from each investment.
Year | ABC | ZYX |
1 | $700 | $13,100 |
2 | $1,800 | $3,900 |
3 | $3,500 | $3,500 |
4 | $7,200 | $1,800 |
5 | $9,900 | $800 |
Total | $23,100 | $23,100 |
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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