Suleiman Must Make a Choice Between Two Investment Alternatives

Multiple Choice

Suleiman must make a choice between two investment alternatives. Alternative 1 will provide him returns of $300 000 at the end of second year and $700 000 at the end of fifth year. Alternative 2 will provide him returns $180 000 at the end of each of the next six years. Alternative 3 will provide him returns $370 000 at the end of second, fourth and sixth years. Which alternative is preferable if money is worth 9.4%?

A) Alternative 1
B) Alternative 2
C) Alternative 3
D) Alternative 2 or Alternative 3, as both are essentially same
E) Alternative 1 or Alternative 3, as both are essentially same