VIII. Annual cash inflows from two competing investment opportunities are given below. Each investment opportunity will require the same initial investment, $150,000. The firms required rate of return on investments is 15%.

YEAR INVESTMENT A INVESTMENT B

1 $30,000 $ 40,000

2 60,000 60,000

3 50,000 50,000

4 90,000 80,000

TOTAL $230,000 $230,000

Required: (10 pts.)

(1) Compute the Net Present Value of each investment.

(2 Which investment should be made, and explain why.