Your company has $440,000 to invest in one of the following:

Company 1: You are determining whether to purchase another company or firm. A

firm has projected free cash flows of $30,000 for Year 1, $50,000 for Year 2, 80,000

for Year 3, 110,000 for Year 4, and 130,000 for Year 5. The projected terminal value at

the end of Year 5 is $300,000. The firm's Weighted Average cost of Capital (WACC) is

12.0%. $440,000 Investment.

Company 2: You are determining whether to purchase another company or firm. A

firm has projected free cash flows of $40,000 for Year 1, $60,000 for Year 2, 80,000

for Year 3, 100,000 for Year 4, and 120,000 for Year 5. The projected terminal value at

the end of Year 5 is $300,000. The firm's Weighted Average cost of Capital (WACC) is

12.0%. $440,000 Investment.

Based only on your calculation of DCF

with the $440,000 investment which company would you prefer to invest

Company A	Year	1	2	3	4	5
		30,000	50,000	80,000	110,000	130,000			$267,260.31
WACC	12%
Term Value	300,000
Company B	Year	1	2	3	4	5
		40,000	60,000	80,000	100,000	120,000			$272,131.37
WACC	12%
Term Value	444,000