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Suppose that you are evaluating two investments, both of which require you to pay $5,000 today. Investment A will pay you $7,020 in five years, whereas Investment B will pay you $8,126 in eight years.

a. Based only on the return you would earn from each investment (I/Y), which is better?

b. Can you think of any factors other than the expected return that might be important to consider when choosing between the two investment alternatives?

Financial Management, Finance

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