Thomas Inc. has two independent investment opportunities, each requiring an initial investment of $15,000. The company's...
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Thomas Inc. has two independent investment opportunities, each requiring an initial investment of $15,000. The company's hurdle rate is 14 percent. The cash inflows for each investment are provided below. Investment A Investment B Year 1 S 20,000 $ 70,000 Year 2 30,000 50,000 Year 3 50,000 40,000 Year 4 70.000 10.000 Total inflows S170,000 S170,000 Without making any calculations, which investment will have the higher net present value? O The net present values of Investment A and B are equal. O None of the answer choices is correct. Investment A because there is an increasing trend in cash inflows. O Investment B because it generates most of the cash inflows early on. Thomas Inc. has two independent investment opportunities, each requiring an initial investment of $15,000. The company's hurdle rate is 14 percent. The cash inflows for each investment are provided below. Investment A Investment B Year 1 S 20,000 $ 70,000 Year 2 30,000 50,000 Year 3 50,000 40,000 Year 4 70.000 10.000 Total inflows S170,000 S170,000 Without making any calculations, which investment will have the higher net present value? O The net present values of Investment A and B are equal. O None of the answer choices is correct. Investment A because there is an increasing trend in cash inflows. O Investment B because it generates most of the cash inflows early on.
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Option d Investment B because it generates most of the cash inflows early on Explanation A... View the full answer
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