part 1 : ABC, Ltd. is considering undertaking a special project. The initial cash outlay is $75,000. The project will return $8,000 at the end of each year for 12 years. Find the net present value if the discount rate is 6% compounded annually.

a. $7929 b. -$7929 c. $21000 d. -$21000

Part 2: A selection has to be made between two investment alternatives. The first alternative offers a net return of $47,000 after three years, $30,000 after five years and $26,000 after seven years. The second alternative provides a net return of $13,000 per year for seven years. Determine the preferred alternative according to the discounted cash flow criterion if money is worth 11%.

a. 1st alternative preferred, earning extra $3,434

b. 1st alternative preferred, earning extra $41,741

c. 1st alternative preferred, earning extra $12,000

d. 2nd alternative preferred, earning extra $24,183