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Investment A: This investment requires an immediate outlay of $70,000 and another investment of $40,000 in year 3 . The investment will return annual profits
Investment A: This investment requires an immediate outlay of $70,000 and another investment of $40,000 in year 3 . The investment will return annual profits of $50,000 from year 2 to year 6 . At the end of year 6 , the investment has a residual value of $10,000. Investment B: This investment requires an immediate outlay of $25,000 and additional investments of $10,000 per year from year 1 to year 3 . The investment will return annual profits of $26,000 from year 4 to year 6 . At the end of year 6 , the investment has a residual value of $15,000. The cost of capital is 8.5%. Investment A: This investment requires an immediate outlay of $70,000 and another investment of $40,000 in year 3 . The investment will return annual profits of $50,000 from year 2 to year 6 . At the end of year 6 , the investment has a residual value of $10,000. Investment B: This investment requires an immediate outlay of $25,000 and additional investments of $10,000 per year from year 1 to year 3 . The investment will return annual profits of $26,000 from year 4 to year 6 . At the end of year 6 , the investment has a residual value of $15,000. The cost of capital is 8.5%
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