A company must make a choice between two investment alternatives. Alternative 1 will return the...
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A company must make a choice between two investment alternatives. Alternative 1 will return the company $10,000 at the end of five years and $70,000 at the end of six years. Alternative 2 will return the company $12,000 at the end of each of the next six years. The company normally expects to earn a rate of return of 11% on funds invested. Compute the present value of each alternative and determine the preferred alternative according to the discounted cash flow criterion.
The present value of Alternative 1 is $
The present value of Alternative 2 is $
The preferred alternative is ...
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