Question: You are deciding between two mutually exclusive investment opportunities. Both require the same initial investment of $ 10.3 million. Investment A will generate $ 2.06
You are deciding between two mutually exclusive investment opportunities. Both require the same initial investment of $ 10.3 million. Investment A will generate $ 2.06 million per year? (starting at the end of the first? year) in perpetuity. Investment B will generate $ 1.42 million at the end of the first? year, and its revenues will grow at 2.9 % per year for every year after that. a. Which investment has the higher IRR?? b. Which investment has the higher NPV when the cost of capital is 7.6 %?? c. In this? case, when does picking the higher IRR give the correct answer as to which investment is the best? opportunity?
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