Annual cash inflows that will arise from two competing investment projects are given below: The discount rate

Question:

Annual cash inflows that will arise from two competing investment projects are given below:

Year Investment A Investment B $ 3,000 $12,000 9,000 6,000 6,000 9,000 12,000 3,000 $30,000 S30,000 2. 4. 3.

Required:

Compute the present value of the cash inflows for each investment.

Discount Rate
Depending upon the context, the discount rate has two different definitions and usages. First, the discount rate refers to the interest rate charged to the commercial banks and other financial institutions for the loans they take from the Federal...