Suppose you are offered two investment alternatives. If you choose Alternative 1, you will have to make an immediate outlay of $9000. In return, you will receive $500 at the end of every 3 months for the next 10 years. If you choose Alternative 2, you will have to make an outlay of $4000 now and $5000 in 2 years. In return, you will receive $30 000 in 10 years from now. Interest is 12% compounded semi- annually.
For the investment choices, compute the net present value. Determine investment should be accepted or rejected according to the net present value criterion.