You have $20,000 to invest and must choose between the two investments listed below. Year Investment A
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Question:
You have $20,000 to invest and must choose between the two investments listed below.
Year | Investment A | Investment B |
Initial Investment: | $ 20,000 | $ 20,000 |
1 | 4,850 | 4,250 |
2 | 4,850 | 4,250 |
3 | 4,850 | 4,250 |
4 | 4,850 | 4,250 |
5 | 4,850 | 4,250 |
Terminal Value | - | 3,500 |
Total Inflows | 24,250 | 24,750 |
Average annual net cash revenue | 4,850 | 4,250 |
Annual depreciation | 4,000 | 3,300 |
Average annual net revenue | 850 | 950 |
a) Using the information above, calculate the requested measures for each investment alternative Record your answers in the space provided.
Record answers below | ||
Investment A | Investment B | |
Simple rate of return as percent of initial cost | ||
Net present value (i = 6%) | ||
Payback period |
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
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