Which product project would be the best using a discount rate of 8 percent? a. Estimated investment

Question:

Which product project would be the best using a discount rate of 8 percent?

a. Estimated investment cost of $185,000; annual cash inflows of $26,000 for 10 years, with a salvage value of $2500.

b. Estimated investment cost of $82,000; annual cash inflows of $6,000 for 25 years, with no salvage value.

c. Estimated investment cost of $249,000; annual cash inflows of $80,000 for four years, with a salvage value of $16,000.

Salvage Value
Salvage value is the estimated book value of an asset after depreciation is complete, based on what a company expects to receive in exchange for the asset at the end of its useful life. As such, an asset’s estimated salvage value is an important... 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...