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Business, 24.12.2019 23:31 macylen3900

Two mutually exclusive investment opportunities require an initial investment of $7 million.

investment a pays $2.0 million per year in perpetuity, while investment b pays $1.4 million in the first year, with cash flows increasing by 4% per year after that.

at what cost of capital would an investor regard both opportunities as being equivalent? a) 7%
b) 3%
c) 13%
d) 15%

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Two mutually exclusive investment opportunities require an initial investment of $7 million.
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