solve it plz For the flowing Cashflows: for the following Cashflows: For the flo
ID: 1094169 • Letter: S
Question
solve it plz
For the flowing Cashflows: for the following Cashflows: For the flowing Cashflows: Year Option l Option 2 Year Option1 Option 2 Year Option1 Option 2 0 1000.00 1000.00 0 1000.00 1000.00 0 1000.00 1000.00 1 50.00 1 50.00 1 50.00 2 75.00 2 75.00 2 75.00 3 -1243.00 -1145.00 3 -1243.00 -1145.00 3 -1243.00 -1145.00 Total -118.00 -145.00 Total -118.00 -145.00 Total -118.00 -145.00 Determine the present value of Option 1 at a compound interest rate of 10% Determine the Present value of Option 2 at a compound interest rate of 10% Which Option is the best to choose? Select one: Select one: Select one: ) a. Option 1 and Option 2 a. 173.55 a. 933.88 b. Option 1 b. 139.74 b. 45.45 c. Option 1 or Option 2 C. 173.55 d. Option 2 d. 860.26Explanation / Answer
1. present value of option 1 :
1000 + 50*0.909 +75 *0.826 + (-1243 * 0.751) = $ 173.55
2. present value of Option 2 :
1000 + (-1145*0.751 ) = $ 139.74
therefore, Option1 and option 2 both have positive NPV's..So, Both should be chosen..
THankyo :)
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