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 $15,000 and will produce cash flows as follows:

End of Year	Investment
A	B
1	$ 8,000	$ 0
2	8,000	0
3	8,000	24,000

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 Which investment should Alfarsi choose?

Question 15 Select one:

a.

Only Investment A is acceptable.

b.

Only Investment B is acceptable.

c.

Both investments are acceptable, but A should be selected because it has the greater net present value.

d.

Both investments are acceptable, but B should be selected because it has the greater net present value.

e.

Neither machine is acceptable.