Question

Bob is considering investing in one of the following investment projects. A B C D Initial cost 100 130 200 330 Annual Income 148 130.78 185 184.55 Annual Cost 123.62 92 137.52 93 Each alternative has a 5 year useful life.

Answer 1

Particulars	A	B	C	D
Initial Cost (A)	100.00	130.00	200.00	330.00
Annual Income	148.00	130.78	185.00	184.55
Less: Expenses	123.62	92.00	137.52	93.00
Net Income (B)	24.38	38.78	47.48	91.55
Annual Return (B/A)	24.38%	29.83%	23.74%	27.74%

Since B is given higher return, therefore B should be selected