Question: Bob Davies must decide whether to invest 100 000 in his

Bob Davies must decide whether to invest $100,000 in his own business or in another local business. Both investment projects have an expected life of five years. The cash flow of each is as follows:


Suppose the risk of the projects is the same and is accounted for by a risk premium of 6 percent per year. Would either investment make sense? Which would bebetter?


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  • CreatedSeptember 27, 2014
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