Consider the following opportunities. Opportunity 1 requires a $4,000 cash payment now (Year 0) but will result in $14,000 cash received in Year 5. Opportunity 2 requires no cash outlay and results in $3,500 cash received in Year 3 and Year 5. Use Appendix A and Appendix B.
Use a 6 percent discount rate and determine whether Opportunity 1 or Opportunity 2 results in a greater NPV.
Opportunity 1: ?
Opportunity 2: ?
Greater NPV: ?