Problem 7-24

A firm must choose between two investment alternatives, each costing $95,000. The first alternative generates $35,000 a year for four years. The second pays one large lump sum of $155,300 at the end of the fourth year. If the firm can raise the required funds to make the investment at an annual cost of 9 percent, what are the present values of two investment alternatives? Use Appendix B and Appendix D to answer the question. Round your answers to the nearest dollar. PV_{(First alternative)}: $ _______ PV_{(Second alternative)}: $_______