Year End Cash Flow Alternative A Alternative B 0 -1,000 600 1 600 500 2 600 -2,000 3 600 400 4 600 200 5 -2,100 -1,000 6 700 1,386

Financial Management: Theory & Practice
16th Edition
ISBN:9781337909730
Author:Brigham
Publisher:Brigham
Chapter4: Time Value Of Money
Section: Chapter Questions
Problem 12MC: (1) What is the value at the end of Year 3 of the following cash flow stream if the quoted interest...
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Year End

Cash Flow

Alternative A

Alternative B

0

-1,000

600

1

600

500

2

600

-2,000

3

600

400

4

600

200

5

-2,100

-1,000

6

700

1,386

 

a) Solve for the Net Present Value of the alternatives A and B using interest rates from 0% upward

b) what are the rate of return of the two alternatives

c) If your MARR is 8 percent, which alternatives would you select? Comment briefly on your results. What are some problems associated with the ROR method?

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