(O13-2) Investments E and F are mutually exclusive and have physical lives of five and 10 years, respectively. Each requires an investment (PV of costs) of
$5,000
. After-tax annual net cash flows are
$2,400
for
E
and
$1,800
for
F
. If investment
F
can be sold for
$2500
(salvage value) at the end of year 5 , what is the present value of the salvage value for investment
F
using an 8 percent discount rate? Hint:
PV=(FV)/((1+i)^(n))

$1,628

$1,701

$1,892

$1,928

Question

(O13-2) Investments E and F are mutually exclusive and have physical lives of five and 10 years, respectively. Each requires an investment (PV of costs) of

$5,000

. After-tax annual net cash flows are

$2,400

for

E

and

$1,800

for

F

. If investment

F

can be sold for

$2500

(salvage value) at the end of year 5 , what is the present value of the salvage value for investment

F

using an 8 percent discount rate? Hint:

PV=(FV)/((1+i)^(n))

$1,628

$1,701

$1,892

$1,928

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