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You are thinking about setting up a fish farm in your pond. You can rig it up to farm Tilapia or Pollock, but not both.
You are thinking about setting up a fish farm in your pond. You can rig it up to farm Tilapia or Pollock, but not both. You have the following information on the two possibilities:
Type of Fish Farm | Initial Cost | Annual Cash Flow |
Tilapia | $1,000 | $200 |
Pollock | $1,800 | $350 |
Each option will yield the annual cash flows for 10 years and then will be finished with no additional cost or revenue. If the required return is 8%, what is the PI of the incremental project that you would use to decide between these two types of fish farms?
A.) 0.6468 B) 0.3047 C.) 0.3420 D.) 0.2581
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