Which alternative would the company choose? 1 answer below »

Miami Company has $15,000 to invest. Management is trying to decide between two alternative uses for the funds as follows. The company’s discount rate is 16%.

Project A

Project b

Investment required

$15,000

$15,000

Single cash inflow at the end of 10 years

$0

$60,000

Annual cash inflows

$4,000

$0

Life of the project

10 years

10 years

Required: Which alternative would the company choose?

 

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