A company has two investment opportunities. Alternative 1 (Alt. 1) pays $8,000 (inflow) two years from now, and $26,000 (inflow) four years from now. Alternative 2 (Alt. 2) pays $8,000 (inflow) at the end of every year for five years. Interest is 6.71% compounded annually. Which is the preferable alternative? Round the values for PV to the nearest cent. TWO YEARS P/Y C/Y N I/Y PV PMT FV % $ FOUR YEARS % FIVE YEARS % Write the Discounted Cash Flow (DCF) for Alt. 1 and Alt. 2. Enter positive values for Alt. 1, and Alt. 2, rounded to the nearest dollar.

A company has two investment opportunities. Alternative 1 (Alt. 1) pays $8,000 (inflow) two years from now, and $26,000 (inflow) four years from now. Alternative 2 (Alt. 2) pays $8,000 (inflow) at the end of every year for five years. Interest is 6.71% compounded annually. Which is the preferable alternative? Round the values for PV to the nearest cent. TWO YEARS P/Y C/Y N I/Y PV PMT FV % $ FOUR YEARS % FIVE YEARS % Write the Discounted Cash Flow (DCF) for Alt. 1 and Alt. 2. Enter positive values for Alt. 1, and Alt. 2, rounded to the nearest dollar.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 16P

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