Question: Two investments offer a series of cash payments over the next four years, as shown in the following table.
Investment Year 1 Year 2 Year 3 Year 4
1 $100 $200 $300 $400
2 $250 $250 $250 $250
a. What is the total amount of money paid by each investment over the four years?
b. From a time value of money perspective, which of these investments is more attractive?
c. Can you think of a reason why investors might prefer Investment 1?