Which investment has the higher irr

Reference no: EM13324621

you are deciding between two mutually exclusive investment opportunities. Both require the same initial investment of $10 million. Investment A will generate $2 million per year (starting at the end of the first year) in perpetuity. Investment B will generate $1.5 million at the end of the first year and its revenues will grow at 2% 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%?

• 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: EM13324621

Questions Cloud

Find how far does the second bearing fall in that time : A ball bearing is dropped from rest at a point A. At the instant it passes a mark 4.5 m below A, How far does the second bearing fall in that time

Companies with the best csr reputations : The Companies With the Best CSR Reputations- Find artical in business and rephrase each section of the article and critique whether or not agreed with him, and if there are examples to support artical

Evaluate the ratio of solubility of mg(oh)2 : Calculate the ratio of solubility of Mg(OH)2 dissolved in pure H2O to Mg(OH)2 dissolved in a 0.180 M NaOH solution? Express your answer numerically to three significant figures.

Find the speed of the oxygen atom : A helium atom (m= 6.6465 x 10^-27 kg) collides elastically with an oxygen atom (m = 2.6560x10^26kg) at rest. Find the speed of the oxygen atom

Which investment has the higher irr : Which investment has the higher IRR?

What should the initial speed have to be to make the putt : At the 18th green of the U. S. Open you need to make a 20.5 ft putt to win the tournament. Assuming the deccelration caused by the grass is constant, what should the initial speed have to be to make the putt

Explain if the system is allowed to expand as n2 is added : If the system is allowed to expand as N2 is added at a cosntant total pressure of 1 bar, what will be the equilibrium degree of dissociation when the N2 partial pressure is 0.6 bar

What is the standard deviation of the market portfolio : What is the standard deviation of the market portfolio?

Determine how high does the rocket go : A model rocket is fired upward. The rocket's average initial acceleration is 40.5 m/s2 until the fuel burns out in 0.805 s. How high does the rocket go

User Account

All Pages