Question
Two alternative investments require the same cash outlay. Their net cash returns are as follows: ALTERNATIVE A: $20,000 each year for five years beginning one
Two alternative investments require the same cash outlay. Their net cash returns are as follows:
ALTERNATIVE A: $20,000 each year for five years beginning one year from now.
ALTERNATIVE B: $10,000 each year for 11 years beginning one year from now.
If money is worth 20% compounded annually, which investment alternative should be chosen? What is the size of the current economic advantage of the preferred alternative?
Alternative A by $7887.52
Alternative A by $16,541.64
Alternative B by $7887.52
Alternative B by $16,541.64
Alternative B by $10,000.00
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