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Apple Inc. is evaluating two investment options. Option A requires an initial investment of $50,000 and promises to generate cash flows of $15,000 annually for

Apple Inc. is evaluating two investment options. Option A requires an initial investment of $50,000 and promises to generate cash flows of $15,000 annually for 6 years. Option B requires an initial investment of $60,000 and generates cash flows of $12,000 annually for 8 years. Using a discount rate of 8%, compare the net present value (NPV) of both options in the table below:

Investment Option

Initial Investment

Annual Cash Flows

Maturity (Years)

NPV (at 8%)

Option A

$50,000

$15,000

6


Option B

$60,000

$12,000

8


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