A Company Has Two Investment Choices

question 19

Essay

A company has two investment choices. Alternative A requires an immediate outlay of $4000.00 and offers a return of $14 000.00 after seven years. Alternative B requires an immediate outlay of $3600.00 in return for which $500.00 will be received at the end of every six months for the next seven years. If the rate of return is 6% compounded semi-annually, determine which alternative is preferable.

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Definitions:

Retrieval

The process of accessing and bringing into conscious awareness information stored in memory.

Stored Information

Information that is retained in the brain or another storage system for retrieval and use at a later time.

Sensory Memory

The shortest-term element of memory, it is the ability to retain impressions of sensory information after the original stimuli have ended.

Sensory Modalities

the different channels through which humans and animals perceive the environment, such as sight, sound, touch, taste, and smell.