Practice:

a.Only Investment A is acceptable.

b.Only Investment B is acceptable.

c.Both investments are acceptable, but A should be selected because it has the greater net present value.

d.Both investments are acceptable, but B should be selected because it has the greater net present value.

e.Neither machine is acceptable.

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 $15,000 and will produce cash flows as follows: The present value factors of $1 each year at 15% are: 10.8696 20.7561 30.6575 The present value of an annuity of $1 for 3 years at 15% is 2.2832 Which investment should Alfarsi choose