Alfarsi Industries uses the net present value method to make investment decisions and requires a 15% annual return on all investments. The company is considering two different investments. Each require an initial investment of $15,300 and will produce cash flows as follows:
End of Year Investment
A B
1 $ 8,300 $ 0
2 8,300 0
3 8,300 24,900

The present value factors of $1 each year at 15% are:
1 0.8696
2 0.7561
3 0.6575

The present value of an annuity of $1 for 3 years at 15% is 2.2832
The net present value of Investment B is:
a. $1,072.
b. $(16,372).
c. $9,600.
d. $41,272.
e. $-6,312.