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Investments A and B are mutually exclusive and cost $1,000 each. The firm's cost of capital is 10%, and the investments' estimated cash inflows are:
Investments A and B are mutually exclusive and cost $1,000 each. The firm's cost of capital is 10%, and the investments' estimated cash inflows are: YEAR CASE A CASE B 1 $1,200 0 2 0 0 3 0 $1,500 What investment should the firm make according to internal rate of return (IRR)? SHOW YOUR CALCULATIONS FOR EACH CASE (or inputs if you use a financial calculator or calculator) and MAKE SURE YOU STATE WHICH INVESTMENT or B) IS YOUR CHOICE. CARRY THE DECIMAL PLACE TO AT LEAST ONE PLACE (ie. 12.3%)
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