Problem 7-24

A firm must choose between two investment alternatives, each costing $100,000. The first alternative generates $30,000 a year for five years. The second pays one large lump sum of $168,600 at the end of the fifth year. If the firm can raise the required funds to make the investment at an annual cost of 8 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)}: $

Which alternative should be preferred? The -Select-firstsecondItem 3 alternative should be preferred.