TB MC Qu. 24-110 (Algo) Alfarsi Industries uses the net present value...

Alfarsi Industries uses the net present value method to make investment decisions and requires a 15% annual return on all investments. The company is considering two different investments. Each require an initial investment of $14,600 and will produce cash flows as follows:

End of Year	Investment
	A	B
1	$ 9,400	$ 0
2	9,400	0
3	9,400	28,200

The present value factors of $1 each year at 15% are:

1	0.8696
2	0.7561
3	0.6575

The present value of an annuity of $1 for 3 years at 15% is 2.2832. The net present value (rounded to the nearest whole dollar) of Investment A is:

Multiple Choice

• $18,542.

• $(14,600).

• $13,600.

• $(21,463).

• $6,862.