Consider three investments: Investment A, investment B and Investment C with the costs of 600, 500 dollars and 400 dollars respectively. Investment A will bring you a cash flow of 100, 200 and 300 at the end of years 1, 2 and 3 respectively. Investment B will bring you 300, 200, 0 at the end of years, 1, 2 and 3 respectively. Investment C will bring 350, 50 and 50 for years 1, 2 and 3 respectively.
a- If interest rate is 4% , which investment will you choose if any? b- If interest rate is 5% , which investment will you choose if any?