32.

Alfarsi Industries uses the net present value method to make investment decisions and requires a 15% annual return on all investments. The company is considering two different investments. Each require an initial investment of $15,500 and will produce cash flows as follows:

End of Year	Investment
	A	B
1	$8,500	$0
2	8,500	0
3	8,500	25,500

The present value factors of $1 each year at 15% are:

1	0.8696
2	0.7561
3	0.6575

The present value of an annuity of $1 for 3 years at 15% is 2.2832

The net present value of Investment B is:

$1,266.

$(16,766).

$10,000.

$3,907.

31.

Alfarsi Industries uses the net present value method to make investment decisions and requires a 15% annual return on all investments. The company is considering two different investments. Each require an initial investment of $15,400 and will produce cash flows as follows:

End of Year	Investment
	A	B
1	$8,400	$0
2	8,400	0
3	8,400	25,200

The present value factors of $1 each year at 15% are:

1	0.8696
2	0.7561
3	0.6575

The present value of an annuity of $1 for 3 years at 15% is 2.2832

The net present value of Investment A is:

$16,569.

$(15,400).

$9,800.

$(19,180).

$3,779.