Reconsider the data of Problem 31.

Data from Problem 31

The following three investment opportunities are available. The returns for each investment for each year vary, but the first cost of each is $20,000. Based on a future worth analysis, which investment is preferred? MARR is 9 percent/year.

a. For each of the investments, calculate the average annual return without considering the time value of money.

b. Describe the pattern exhibited by the returns for each investment with respect to your result in part (a).

c. Are your results from (b) and the FWs from Problem 31 consistent with the concept of the time value of money?

Explain.

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End of Year Investment 1 Investment 2 Investment 3 1 $8,000 $11,000 $9,500 2 $9,000 $10,000 $9,500 3 $10,000 $9,000 $9,500 4 $11,000 $8,000 $9,500