Suppose that you have $10,000 to invest and you are trying to decide between investing in project A or project B. If you invest in project A, you will receive a payment of $12,500 at the end of 3 years. If you invest in project B, you will receive a payment of $18,500 at the end of 12 years. The annual interest rate is 5 percent and both projects carry no risk. Instructions: Round your answers to the nearest dollar. Do not round your intermediate calculations. a. What is the present value of each project? Enter your answers in the table below. Project A = Project B = Present Value 2894 15265 $ $ b. Which project will you choose for your investment? ● Project A O Project B 4

Suppose that you have $10,000 to invest and you are trying to decide between investing in project A or project B. If you invest in project A, you will receive a payment of $12,500 at the end of 3 years. If you invest in project B, you will receive a payment of $18,500 at the end of 12 years. The annual interest rate is 5 percent and both projects carry no risk. Instructions: Round your answers to the nearest dollar. Do not round your intermediate calculations. a. What is the present value of each project? Enter your answers in the table below. Project A = Project B = Present Value 2894 15265 $ $ b. Which project will you choose for your investment? ● Project A O Project B 4

Financial And Managerial Accounting

15th Edition

ISBN:9781337902663

Author:WARREN, Carl S.

Publisher:WARREN, Carl S.

Chapter26: Capital Investment Analysis

Section: Chapter Questions

Problem 3CMA

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