Question

Determine which of two investment projects a manager should choose if the discount rate of the firm is 20%. The first project promises a profit of $100,000 in each of the next four years, while the second project promises a profit of $75,000 in each of the next six years.

Answer 1

a. 100(.8)+100(.8^2)+100(.8^3)+100(.8^4)=236K
b. 75(.8)+75(.8^2)+75(.8^3)+75(.8^4)+75(.8^5)+75(.8^6)=221K

Answer 2

No its a.100(.8)+100(.8^2)+100(.8^3)+100(.8^4)=236K then b. 75(.8)+75(.8^2)+75(.8^3)+75(.8^4)+75(.8^5)+75(.8^6)=222k little bitttt