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bachelor in business administration
Polytechnic State University Sanluis
Jan-2006 - Nov-2010
CPA
Polytechnic State University
Jan-2012 - Nov-2016
Professor
Harvard Square Academy (HS2)
Mar-2012 - Present
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A hotel manager wishes to choose between two alternative investments giving the following annual net cash inflows over a five-year period:
|
Year |
Alternative 1 |
Alternative 2 |
|
1 |
$ 8,400 |
$24,200 |
|
2 |
11,600 |
19,800 |
|
3 |
17,000 |
17,200 |
|
4 |
23,000 |
10,800 |
|
5 |
24,000 |
8,000 |
The amount of the investment under either alternative will be $70,000.
a. Using the payback period method, in which year, under both alternatives, will she have recovered the initial investment?
b. Using NPV at 10 percent, would either alternative be a good investment?
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