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The ABC Co. is considering undertaking an investment that promises to have the following cash flows: period 0, -$50; period 1, $90. If the firm
The ABC Co. is considering undertaking an investment that promises to have the following cash flows: period 0, -$50; period 1, $90. If the firm waits a year, it can invest in an alternative (that is, mutually exclusive) investment that promises to pay -$60 in period 1 and $100 in period 2. Assume a time value of money of 5%. Which investment should the firm undertake? Use the NPV and IRR methods.
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