Problem $7-24$

A firm must choose between two investment alternatives, each costing $$95,000.$ The first alternative generates $$25,000$ a year for five years. The second pays one large lump sum of $$148,100$ at the end of the fifth 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.

PV$($First alternative$)$: $

PV$($Second alternative$)$: $

Which alternative should be preferred?

The $|$ alternative should be preferred.