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39 . LO . 3 , 1 1 Emily has $100 000 that she wants to invest and is considering the following two options Option

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39 . LO . 3 , 1 1 Emily has $100 000 that she wants to invest and is considering the following two options Option A : Investment in Redbird Mutual Fund , which is expected to produce interest income of 58 000 per year Option B : Investment in Cardinal Limited Partnership ( buys sells , and operates wine vineyards ) . Emily's share of the partnership's ordinary income and loss over the th next three years would be as follows Year Income ( Loss ) 1 ( $8 000 ) 2 ( 2000 ) 3 34, 000 Emily is interested in the after -I ax effects of these alternatives over a three year horizon Assume that Emily's investment portfolio produces ample passive income to offset any passive losses that may be generated . Her cost of capital is 8% the present Value factors are : 92593 , 85734 , and 79383 ) , and she is in the 28% tax bracket The two investment alternatives possess equal growth potential and comparable financial risk Based on these facts , compute the present value of these two investment alternatives and determine which option Emily should choose

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