Problem $7-24$

A firm must choose between two investment alternatives, each costing $$110,000.$ The first alternative generates $$35,000$ a year for four years. The second pays one large lump sum of $$157,000$ at the end of the fourth year. If the firm can raise the required funds to make the investment at an annual cost of $9$ percent, what are the present values of two investment alternatives? Use Appendix B and Appendix D to answer the question. Round your answers to the nearest dollar.

$P{V}_{(Firstalternative)}$:$

$P{V}_{(Secondalternative)}$:$

Which alternative should be preferred?

The alternative should be preferred.