Investor regard both opportunities as being equivalent

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Reference no: EM132064027

Two mutually exclusive investment opportunities require an initial investment of $ 8 million. Investment A then generates $ 1.50 million per year in perpetuity, while investment B pays $1.10 million in the first year, with cash flows increasing by 3% per year after that. At what cost of capital would an investor regard both opportunities as being equivalent?

Reference no: EM132064027

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