You are deciding between two mutually exclusive investment opportunities. Both require the same initial investment of $9.9 million. Investment A will generate $1.91 million per year? (starting at the end of the first year) in perpetuity. Investment B will generate $1.47 million at the end of the first? year, and its revenues will grow at 2.4% 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 6.8%??
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?
d. The IRR of investment A is ? %. (Round to the nearest? integer.)