You are deciding between two mutually exclusive investment opportunities. Both require the same initial investment of...

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You are deciding between two mutually exclusive investmentopportunities. Both require the same initial investment of $ 9.6million. Investment A will generate $ 2.06 million per yearâ€‹(starting at the end of the firstâ€‹ year) in perpetuity. InvestmentB will generate $ 1.48 million at the end of the firstâ€‹ year, andits revenues will grow at 2.2 % per year for every year after that.a. Which investment has the higher IRRâ€‹? b. Which investment hasthe higher NPV when the cost of capital is 5.8 %â€‹? c. In thisâ€‹case, when does picking the higher IRR give the correct answer asto which investment is the bestâ€‹ opportunity?

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a IRR of Investment A rate of return on investment perpetual cash flow initial investment 206 million 96 million 02146 or 2146 IRR of Investment B first year cash flow initial investment perpetual growth See Answer

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