Calculate the net present value for each investment

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Net Present Value Calculations. Mason, Inc., has two independent investment opportunities, each requiring an initial investment of $66,000.

The company as required rate of return is 8 percent. The cash inflows for each investment are provided as follows.

 

Investment
Y

Investment
Z

Year 1

$ 35,000

$          5,000

Year 2

25,000

15,000

Year 3

15,000

25,000

Year 4

5,000

35,000

Total inflows

$ 80,000

$ 80,000

 

 

Required:

Without resorting to calculations, which investment will have the highest net present value? Explain.

Calculate the net present value for each investment (remember to include the initial investment cash outflow in your calculation). Should the company invest in either investment? Round to the nearest dollar.

Reference no: EM131691293

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