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Amazon.com Inc. is evaluating two investment options for its fulfillment centers: Option A requires an initial investment of $500 million and generates annual cash flows
Amazon.com Inc. is evaluating two investment options for its fulfillment centers:
- Option A requires an initial investment of $500 million and generates annual cash flows of $150 million for the next five years.
- Option B requires an initial investment of $600 million and generates annual cash flows of $180 million for the next six years. If Amazon's required rate of return is 12%, which option should they choose based on the net present value method?
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Introduction to Corporate Finance What Companies Do
Authors: John Graham, Scott Smart
3rd edition
9781111532611, 1111222282, 1111532613, 978-1111222284
