Conventional payback criterion and present worth criterion

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Reference no: EM131842581

You are considering two investment options. In option A, you have to invest $4,500 now and $1,500 three years from now. In option B, you have to invest $3,900 now $1,900 a year from now, and $1,000 three years from now. In both options, you will receive four annual payments of $1,700 each. (You will get the first payment a year from now.) Which of these options would you choose based on (a) the conventional payback criterion, and (b) the present worth criterion, assuming 13% interest? Assume that all cash flows occur at the end of a year.

Reference no: EM131842581

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