10. Assume a $50,000 investment and the following cash flows for two alternatives: Page 456 Year Investment X Investment Y 1 $10,000 $ 20,000 2 11,000 25,000 13,000 15,000 16,000 5 30,000 Which of the alternatives would you select under the payback method? 11. Referring to the previous problem, if the inflow in the fifth year for Investment X were $30,000,000 instead of $30,000, would your answer change under the payback method? 12. Referring to problem 10, analyze the two investment alternatives under the net present value method using a 15 percent discount rate. Would your answer change?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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10. Assume a $50,000 investment and the following cash flows for two
alternatives:
Page 456
Year
Investment X
Investment Y
1
$10,000
$ 20,000
2
11,000
25,000
13,000
15,000
16,000
5
30,000
Which of the alternatives would you select under the payback method?
11. Referring to the previous problem, if the inflow in the fifth year for Investment
X were $30,000,000 instead of $30,000, would your answer change under the
payback method?
12. Referring to problem 10, analyze the two investment alternatives under the net
present value method using a 15 percent discount rate. Would your answer
change?
Transcribed Image Text:10. Assume a $50,000 investment and the following cash flows for two alternatives: Page 456 Year Investment X Investment Y 1 $10,000 $ 20,000 2 11,000 25,000 13,000 15,000 16,000 5 30,000 Which of the alternatives would you select under the payback method? 11. Referring to the previous problem, if the inflow in the fifth year for Investment X were $30,000,000 instead of $30,000, would your answer change under the payback method? 12. Referring to problem 10, analyze the two investment alternatives under the net present value method using a 15 percent discount rate. Would your answer change?
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