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ABC Corporation is considering making an investment in the following business opportunities: Opportunity A: This will require an initial investment of $100,000 and another investment

  1. ABC Corporation is considering making an investment in the following business opportunities:
    1. Opportunity A: This will require an initial investment of $100,000 and another investment of $50,000 after one year. In years 2, 4, and 6, the following income is expected from the investment respectively $200,000, $60,000, and $40,000.
    2. Opportunity B: This will require an initial investment of $150,000, and income of $200,000, $60,000, and $40,000 in years 1,3 and 5

Assume the cost of capital is 8%, which opportunity will you recommend to the management to invest in and why. Show details of your work including the cash flow diagrams and cashflow table

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