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Two mutually exclusive investment opportunities require an initial investment of $ 8 million. Investment A then generates $ 1.50 million per year in perpetuity, while investment B pays $1.10 million in the first year, with cash flows increasing by 3% per year after that. At what cost of capital would an investor regard both opportunities as being equivalent?

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M93051502

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