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Two mutually exclusive investment opportunities require an initial investment of $ 6 million. Investment A then generates $ 1.50 million per year in perpetuity, while
Two mutually exclusive investment opportunities require an initial investment of $ 6 million. Investment A then generates $ 1.50 million per year in perpetuity, while investment B pays $ 1.40 million in the first year, with cash flows increasing by 4 % per year after that. At what cost of capital would an investor regard both opportunities as being equivalent? A. 60% B. 30% C. 15% D. 66%
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