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 $14,700 and will produce cash flows as follows:

End of

Year Investment

A B

1 $9,300 $0

2 9,300 0

3 9,300 27,900

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:

Multiple Choice

• $18,344.
• $(14,700).
• $13,200.
• $(21,234).
• $6,534.