Question

1. You have just graduated from college and want to start your own farm. You have three potential options: (1) a cow/calf operation, (2) grow your own crops, or (3) a feed lot where you finish cattle. All three require an investment of $100,000. The resulting profits for each option are: Option 3 S30,000 30,000 30,000 30,000 30,000 S45,000 40,000 35,000 15,000 15,000 Year 1 Year 2 Year 3 Year 4 Year 5 $15,000 20,000 30,000 35,000 55,000 The required-rate-of-return for the investment is 8% Which option would you choose using the a. simple-rate-of-return method? b. payback period method? c. net present value method? d. IRR method?

Answer 1

Initial investmenke Si

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t&1 on 85000 (t8A ら Option Ci+87)

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Not sure of Part (a)