Which investment has the higher? irr

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You are deciding between two mutually exclusive investment opportunities. Both require the same initial investment of $10.5million. Investment A will generate $1.85 million per year?(starting at the end of the first? year) in perpetuity. Investment B will generate $1.53 million at the end of the first? year, and its revenues will grow at 2.4% per year for every year after that.

a. Which investment has the higher? IRR? he IRR of investment A is? (Round to the nearest? integer.)

b. Which investment has the higher NPV when the cost of capital is 5.9%?? c. In this? case, for what values of the cost of capital does picking the higher IRR give the correct answer as to which investment is the best? opportunity?

Reference no: EM133060864

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