Question: 3. EtaGo has two available projects, A and B. A costs 100 at to and will generate a cash flow 242 at t. B costs

3. EtaGo has two available projects, A and B. A costs

3. EtaGo has two available projects, A and B. A costs 100 at to and will generate a cash flow 242 at t. B costs 340 at to and will also generate the cash flow 242 at t. If EtaGo invests in both A and B, the total cash flow will be 605 at t. The rate of return is 10% (a) What is EtaGo's optimal investment at to? 1 (b) Suppose that another company wants to sell one project A to EtaGo at the price 30. (Obviously, if EtaGo buys the project A from that company, it does not invest in it again by paying the cost 100.) Will EtaGo buy the project A? Will it invest in project B in this case

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