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Alfarsi Industries uses the net present value method to make investment decisions and requires a...

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Accounting

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 $14,800 and will produce cash flows as follows:

End of Year Investment
A B
1 $ 9,200 $ 0
2 9,200 0
3 9,200 27,600

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 A is:

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