MC Qu. 111 Alfarsi Industries uses the...

Alfarsi Industries uses the net present value method to make investment decisions and requires a 15% annual return on all investments. The company is considering two different investments. Each require an initial investment of $16,000 and will produce cash flows as follows:

End of Year	Investment
	A			B
1	$	9,000		$	0
2		9,000			0
3		9,000			27,000

The present value factors of $1 each year at 15% are:

1	0.8696
2	0.7561
3	0.6575

The present value of an annuity of $1 for 3 years at 15% is 2.2832 The net present value of Investment B is:

Multiple Choice

• $1,753.

• $(17,753).

• $11,000.

• $44,753.

• $7,233.