Frank Zanca is considering three different investments that his broker has offered to him
The different cash
flows are as follows:
End of Year A B C
1 300 400
2 300
3 300
4 300 300 600
5 300
6 300
7 300
8 300 600
Because Frank only has enough savings for one investment, his broker has proposed the third alternative to be,
according to his expertise, "the best in town." However, Frank questions his broker and wants to calculate the
present value of each investment. Assuming a 15% discount rate, what is Frank's best alternative?
a. $856.49
b. $661.23
c. $887.02 So, investment C is best.
You might also like to view...
P&G's decision to eliminate dozens of major brands from its portfolio including Crisco, Folgers, and Jif to focus on household care, beauty, and grooming products is an example of ________
A) pruning B) harvesting C) market segmentation D) diversification E) market saturation
What is the primary goal of trade promotions?
A) boosting long-term relationships with final buyers B) motivating salespeople to attend trade shows C) generating qualified business leads and contacts D) rewarding customers for frequent purchases E) persuading resellers to carry a brand