Problem 7-08

A company has two investment possibilities, with the following cash inflows:

Investment Year 1 Year 2 Year 3 A $1,600 1,900 2,300 B $1,200 1,200 1,200 If the firm can earn 6 percent in other investments, what is the present value of investments A and B? Use Appendix B and Appendix D to answer the question. Round your answers to the nearest dollar. PV(Investment A): $

PV(Investment B): $

If each investment costs $5,000, is the present value of each investment greater than the cost of the investment? The present value of investment A is -Select- the cost. The present value of investment B is -Select- the cost.