Annual cash inflows from two competing investment projects are given below:
Year Investment A Investment B
1 $ 4,000 $ 7,000
2 5,000 6,000
3 6,000 5,000
4 7,000 4,000
$ 22,000 $ 22,000
The discount rate is 9%.
Click here to view Exhibit 12B-1 and Exhibit 12B-2, to determine the appropriate discount factor(s) using tables.
Required:
Compute the present value of the cash inflows for each investment.
Present Value of Cash Flows
Year Investment A Investment B
1
2
3
4