Question 3: Two new opportunities are being considered for a venture capital firm. Both are one-time opportunities with no option for renewal. The firm uses a 12 percent/year expected rate of return for decisions of this type. The relevant characteristics for each option are shown below. Based on a present worth analysis, which option is preferred?

Question 3: Two new opportunities are being considered for a venture capital firm. Both are one-time opportunities with no option for renewal. The firm uses a 12 percent/year expected rate of return for decisions of this type. The relevant characteristics for each option are shown below. Based on a present worth analysis, which option is preferred? Option 1 Option 2 Initial Investment $100,000 $75,000 Estimated Life 12 years 9 years Expected Annual Return $16,500 $14,300