You Are Looking to Invest $200,000

question 53

Multiple Choice

You are looking to invest $200,000.You have 3 possible investment options:
(I) A lump sum of $640,000 payable in 10 years
(II) An annuity paying $30,000 at the end of every years for 15 years
(III) A perpetuity paying $25,000 at the end of every year
Using the net present value method of business decision making,which option should be chosen,if any,if the cost of capital is j₁ = 12%?

• A)(I)
• B)(II)
• C)(III)
• D)None of them

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