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Peanut Co. is planning on investing in a new 2-year project, Project Jelly. Project Jelly...

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Accounting

Peanut Co. is planning on investing in a new 2-year project, Project Jelly. Project Jelly is expected to produce cash flows of $100,000 and $120,000 in each of the 2 years, respectively. Peanut requires an internal rate of return of 15%. What is the maximum amount that Peanut should invest immediately in Project Jelly?

Present Value of 1 Future Value of 1

Period 15% Period 15%

1 .870 1 1.150

2 .756 2 1.323

a) $191.400

b) $177,720

c) $220,000

d) $273,760

why the answer is B? THX

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