Q4. A company has to choose between two alternatives. Alternative A will provide a return...
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Q4. A company has to choose between two alternatives. Alternative A will provide a return of $20,000 after 3 years, $60,000 after 6 years, and $ 40,000 after 10 years. Alternative B will bring returns of $10,000 per year for 10 years. If the rate of interest is 14 % compounded semi annually, which alternative is better?
(Hint: Use EAR or Effective Annual Rate if using CF function) (5 marks)
Alternative A:
Alternative B:
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