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Investment A: Year: Cash flow: 0 - $14,000 1 $6,000 2 $6,000 3 $6,000 4 $6,000 5 $6,000 Investment B: Year: 0 - $15,000 Cash
Investment A: Year: Cash flow: 0 - $14,000 1 $6,000 2 $6,000 3 $6,000 4 $6,000 5 $6,000 Investment B: Year: 0 - $15,000 Cash flow: 1 $6,500 2 $6,500 3 $6,500 4 $6,500 5 $6,500 Investment C: Year: Cash flow: 0 - $18,000 1 $12,000 2 $4,000 3 $4,000 4 $4,000 5 $4,000 The cash flows for three projects are shown above. The cost of capital is 9.5%. If an investor decided to take projects with a payback period two years or less, which of these projects would he take? O A. Investment A OB. Investment B O C. Investment C OD. none of these investments
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