Alfarsi Industries uses the net present value method to make investment decisions and requires a 15% annual return on all investments. The company is considering two different investments. Each require an initial investment of $14,700 and will produce cash flows as follows: End ofYearInvestmentAB1$9,300 $0 2 9,300 0 3 9,300 27,900 The present value factors of $1 each year at 15% are: 10.869620.756130.6575 The present value of an annuity of $1 for 3 years at 15% is 2.2832 The net present value of Investment B is: Multiple Choice $(18,344). $8,679. $3,644. $46,244. $13,200

Answered: Alfarsi Industries uses the net present…

Net present value of the investment means difference of present values of cash inflows and cash…

End of
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Investment

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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Alfarsi Industries uses the net present value method to make investment decisions and requires a 15% annual return on all investments. The company is considering two different investments. Each require an initial investment of $14,700 and will produce cash flows as follows:

The present value factors of $1 each year at 15% are:


1	0.8696
2	0.7561
3	0.6575

The present value of an annuity of $1 for 3 years at 15% is 2.2832

The net present value of Investment B is:

Multiple Choice

$(18,344).
$8,679.
$3,644.
$46,244.
$13,200

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