# Question: A firm must choose between two investment alternatives each costing

A firm must choose between two investment alternatives, each costing $100,000. The first alternative generates $35,000 a year for four years.

The second pays one large lump sum of $157,400 at the end of the fourth year. If the firm can raise the required funds to make the investment at an annual cost of 10 percent, which alternative should be preferred?

The second pays one large lump sum of $157,400 at the end of the fourth year. If the firm can raise the required funds to make the investment at an annual cost of 10 percent, which alternative should be preferred?

## Relevant Questions

You wish to retire in 12 years and currently have $50,000 in a savings account yielding 5 percent annually and $100,000 in quality "blue chip" stocks yielding 10 percent. If you expect to add $30,000 at the end of each year ...You purchase a stock for $10,000 and collect $400 at the end of each year in dividends. You sell the stock for $11,300 after four years. What was the annual return on your $10,000 investment? Two investments generated the following annual returns: a. What is the average annual return on each investment? b. What is the standard deviation of the return on investments X and Y? c. Based on the standard deviation, ...If a corporation earns $270,000 and the payout ratio (proportion distributed) is 30 percent, what is the change in retained earnings? Two firms have sales of $1 million each. Other financial information is as follows: What are the operating profit margins and the net profit margins for these two firms? What are their returns on assets and on equity? Why ...Post your question