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A company is considering two investment options: Option 1 : An investment of $42,000 today, and another investment of $31,000 in year 3, with returns

A company is considering two investment options:

  • Option 1: An investment of $42,000 today, and another investment of $31,000 in year 3, with returns of $12,000 in year 2, $23,000 in year 3, and $50,000 in year 5.
  • Option 2: An investment of $37,000 today, and another investment of $14,000 in year 4, with returns of $18,000 in year 1, $11,000 in year 3, and $35,000 in year 5.
  1. Calculate the internal rate of return for each option.
  2. Which investment option should the company select? Explain your answer.

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