Question
Richard Ramirez is considering investing in either ABC or ZYX. Both investments ABC and ZYX cost $11,000. In order to make the purchase, Richard Ramirez
Richard Ramirez is considering investing in either ABC or ZYX. Both investments ABC and ZYX cost $11,000. In order to make the purchase, Richard Ramirez needs to obtain a loan from the bank at an interest rate of 8%. The bank is only willing to offer Richard Ramirez $11,000. The following table outlines the expected net cash flows from each investment.
YearABCZYX1$600$9,6002$1,400$5,7003$3,800$3,6004$6,600$1,8005$9,200$900Total$21,600$21,600Based on the NPV method, which investment should Richard Ramirez purchase? Do not enter dollar signs or commas in the input boxes. Use the negative sign for a negative NPV. Use the PV tables in the appendix of the textbook. Round your answers to the nearest whole number. NPV of Investment ABC: $Answer NPV of Investment ZXY: $Answer Better Investment: AnswerABCZYX
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