a. Compute the net present value for each of the following cash flows. Assume a cost of money of

a. Compute the net present value for each of the following cash flows. Assume a cost of money of 10 percent.

Investment

 

 

Period

 

 

 

 

 

 

 

 

 

A

$(1,000)

$100

$100

$100

$100

$1,100

B

(1,000)

264

264

264

264

264

C

(1,000)

 

 

 

 

1,611

b. Compute the internal rate of return for each of the cash flows in Problem 1.

c. Compute the payback for each of the cash flows in Problem 1. If the maximum acceptable payback period is four years, which (if any) of the cash flows would be accepted as a desirable investment?