Exclusive investment opportunities

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You are deciding between two mutually exclusive investment opportunities. Both require the same initial investment of $9.6 million. Investment A will generate $1.97 million per year? (starting at the end of the first? year) in perpetuity. Investment B will generate $1.46 million at the end of the first? year, and its revenues will grow at 2.3% 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?

Which investment has the higher IRR??

The IRR of investment A is _____%

Investment B is _______%

Reference no: EM133120691

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