Question
Karla is looking at two investment opportunities which have the following expected cash flows. If her minimum required return is 22%, which proposal would be
Karla is looking at two investment opportunities which have the following expected cash flows. If her minimum required return is 22%, which proposal would be the best based on what the instructor indicated was the more appropriate evaluation method? Investment A Investment B Year 0 $( 1,400,000) $( 1,400,000) Year 1 $ 454,000 $ 456,000 Year 2 $ 887,000 $ 891,000 Year 3 $ 760,000 $ 750,000 Year 4 $ 155,000 $ 145,000 a. Neither proposal would add value. b. Choose Proposal A because it has the highest IRR. c. Choose Proposal A because it has the highest NPV. d. Choose Proposal B because it has the highest IRR. e. Choose Proposal B because it has the highest NPV.
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