An investment company is considering one of two possible business ventures. Project 1 gives a return of $250 000 in four years’ time, whereas Project 2 gives a return of $350 000 in eight years’ time. Which project should the company invest in when the interest rate is 7% compounded annually?

An investment company is considering one of two possible business ventures. Project 1 gives a return of $250 000 in four years’ time, whereas Project 2 gives a return of $350 000 in eight years’ time. Which project should the company invest in when the interest rate is 7% compounded annually?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 27P

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Question

An investment company is considering one of two possible business ventures. Project 1 gives a return of $250 000 in four years’ time, whereas Project
2 gives a return of $350 000 in eight years’ time. Which project should the
company invest in when the interest rate is 7% compounded annually?

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