At what cost of capital would your decision change

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Question - You are deciding between two mutually exclusive investment opportunities. Both require the same initial investment of $10 million. Investment A will generate 2.2 million per year (starting at the end of the first year) in perpetuity. Investment B will generate 1.8 million at the end of the first year, and its revenues will grow 3.4% per year for every year after that. Use the incremental IRR rule to correctly choose between investments A and B when the cost of capital is 6.2% At what cost of capital would your decision change? What is the incremental IRR?

Reference no: EM132929610

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