Alfarsi Industries Uses the Net Present Value Method to Make

question 98

Multiple Choice

Alfarsi Industries uses the net present value method to make investment decisions and requires a 15% annual return on all investments.The company is considering two different investments.Each require an initial investment of $15,000 and will produce cash flows as follows:
The present value factors of $1 each year at 15% are:

The present value of an annuity of $1 for 3 years at 15% is 2.2832
-The net present value of Investment A is:

• A)$18,266.
• B)$(15,000).
• C)$9,000.
• D)$(20,549).
• E)$3,266.

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