Eden Development Company has two competing investments. Proposal A and Proposal B. Proposals A and B have an initial investment of $175,000. The net cash flows estimated for the two investments are as follows:

The estimated residual value of Proposal A at the end of year 4 is $70,000.
Determine which proposal should be favored, comparing the net present values of the two investments and assuming a minimum rate of return of 15%. Use the table of present values in the chapter.

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Net Cash Flow Year Proposal A Proposal B 12345678 $62,000 $65,000 54,000 60,000 45,000 60,000 35,000 55,000 22,000 20,000 20,000 18,000