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2. Thomas Inc. has two independent investment opportunities, each requiring an initial investment of $15,000. The company's hurdle rate is 14 percent. The cash
2. Thomas Inc. has two independent investment opportunities, each requiring an initial investment of $15,000. The company's hurdle rate is 14 percent. The cash inflows for each investment are provided below. Investment A Investment B Year 1 $ 20,000 $ 70,000 Year 2 30,000 50,000 Year 3 50,000 40,000 Year 4 Total inflows 70,000 10,000 $170,000 $170,000 Without making any calculations, which investment will have the higher net present value? a. Investment B because it generates most of the cash inflows early on. b. Investment A because there is an increasing trend in cash inflows. C. The net present values of Investment A and B are equal. d. None of the answer choices is correct.
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