Determine preferred alternative according to discounted flow

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Problem 1: An unavoidable cost may be met by outlays of ?$90,000 now and ?$4,500 at the end of every six months for three years? (Alternative 1) or by making monthly payments of ?$1,970 for seven years? (Alternative 2). Interest is 12?% compounded annually. Compute the present value of each alternative and determine the preferred alternative according to the discounted cash flow criterion.

Reference no: EM132914005

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