The ABC company is considering two investment opportunities. Investment A has an initial cost of $100,000 and will generate cash flows of $40,000 per year for the next three years. Investment B has an initial cost of $150,000 and will generate cash flows of $50,000 per year for the next four years. Assuming that the required rate of return for the ABC company is 10%, which investment opportunity should the company choose? Show all calculations and justify your answer.

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The detailed answer for the above question is provided below To evaluate the two investment opportunities we need to calculate their net present values NPVs The NPV of an investment represents the present value ... View the full answer