Exhibit 8-2
Liam Company Has Two Independent Investment Opportunities,each Requiring

Exhibit 8-2
Liam Company has two independent investment opportunities,each requiring an initial investment of $130,000.The company's required rate of return is 12 percent.The cash inflows for each investment are provided below.
$$\begin{array} { c c c } & \text { InvestmentA } & \text { Investment B } \\\text { Year 1 } & \$ 70,000 & \$ 10,000 \\\text { Year 2 } & 50,000 & 30,000 \\\text { Year 3 } & 30,000 & 50,000 \\\text { Year } 4 & 10,000 & 70,000 \\\text { Total inflows } & \$ 160,000 & \$ 160,000\end{array}$$ $\begin{array}{l}&\text { Factors: Present Value of } \$ 1 & \text { Factors: Present Value of an Annuity } \\\end{array}$
$$\begin{array}{l}\begin{array} { c c c c } ( r = 12 \% ) &&{ ( r = 12 \% ) } \\\hline \text { Year 0 } & 1.0000 & & \\\text { Year 1 } & 0.8929 & \text { Year 1 } & 0.8929 \\\text { Year 2 } & 0.7972 & \text { Year 2 } & 1.6901 \\\text { Year 3 } & 0.7118 & \text { Year 3 } & 2.4018 \\\text { Year 4 } & 0.6355 & \text { Year 4 } & 3.0373\end{array}\end{array}$$
-Refer to Exhibit 8-2.Calculate the net present value for each investment.If the company can only invest in one project,which one should it be?

A) This cannot be determined because they both have the same net present value.
B) Neither Investment A nor B because they both have negative net present values.
C) Investment B.
D) Investment A.
E) None of the answer choices is correct.