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There are two investments we invest-in in two consecutive years. The first project in year one is financed by equity and the second project in
There are two investments we invest-in in two consecutive years. The first project in year one is financed by equity and the second project in year two by debt. The cost of debt after tax is 5%, and the cost of equity is 13%. The internal rate of return is 12 % in the first year. The internal rate of return is 7% in the second year.
Do we invest in the first years project?
Do we invest in the second year investment?
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